Food and drink prices on the rise

By Chris Mercer

- Last updated on GMT

Related tags: Cost

Prices for food and drink have risen sharply in the UK over the
last year, in a sign that higher input costs are increasingly being
passed down the supply chain.

Food and drink prices rose six per cent in the UK in the year up to April, more than double the rate of inflation, according to a report by the Organisation Economic Co-operation and Development OECD's. The rise adds more evidence that tighter supplies of raw materials and higher energy costs are slowly finding their way through to the consumer. Food prices across the OECD's 30 members rose by an average 3.6 per cent during the year, also including a 12 per cent rise in Hungary and a 13 per cent rise in Turkey. In the UK, soft drinks, fruit and vegetables and milk have been some of the most affected products. Liquid milk in supermarkets was around 15 per cent more expensive this May compared to the same period last year, according to new figures from the Milk Development Council. Several analysts have predicted more food price rises around the world in the future, as manufacturers' packaging and energy bills continue to soar on the back of high oil pirces. Increasing demand from emerging markets such as China and India is also spreading resources more thinly. There is concern too that calls to convert agricultural land from food to biofuel production will exasperate the situation. And poor harvests and weather, such as the record-breaking drought in Australia, have added extra costs to some food and drink producers. Dutch brewer Grolsch warned recently that it faced "steep increases"​ in prices for malt and hops this year, because there was not enough quality produce available. Similar cost rises are faced by British brewers this year, according to Mark Hastings, of the British Beer and Pub Association. He told​ earlier this year that some costs may have to be passed on to consumers. More than a quarter of UK manufacturers expect consumer goods prices to rise over the next three months, according to the Confederation of British Industry. A spokesperson for the UK Food and Drink Federation said consumer price rises were difficult to predict, however. "From a manufacturer's point of view, energy and raw materials prices are all going to affect the food price you see."​ She said that higher costs had to be passed on to consumers "in some cases".

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