THE FOOD AND DRINK FEDERATION COMMENT ON INFLATION SURGE

The Food and Drink Federation Comment on Inflation Surge

Balwinder Dhoot, Director of Industry Growth and Sustainability, The Food and Drink Federation (FDF), said:

“Whilst food and drink manufacturers continue to work hard to keep costs down for consumers, we saw food and drink price inflation surge to 3.3% in the first month of 2025, up from 2.0% in December 2024. Rising energy and water bills as well as higher commodity prices, like dairy and cocoa, are all having an impact on production costs.

“Unfortunately, this month isn’t likely to be a flash in the pan for rising food and drink prices. We’re yet to see the full impact of increasing labour costs, with changes to both National Minimum Wage and National Insurance Contributions coming into force in April, and we expect to see this filter through to shoppers over the coming year. We urge government to work with industry to simplify regulation and bring business costs down to help protect consumers from rising prices.”

Background

• Annual food and non-alcoholic drink inflation accelerated to 3.3% in January, up from 2.0% in December 2024. This is the highest annual rate since March 2024. On the month, prices rose by 0.9%.
• Out of the 48 categories reported in January by the Office for National Statistics (ONS), inflation was below 5.0% for 38 categories, of which 12 actually experienced deflation. Inflation was above 5% for 10 categories.
• Prices rose highest for ‘edible offal’, ‘butter’ and ‘olive oil’, with inflation at 20.2%, 18.3% and 16.6%, respectively. Coca rose 14.9% on the year.
• Meanwhile prices fell the fastest for ‘pasta and couscous’ and ‘jams and marmalades’ by 5.9% and 3.2%.
• Global cocoa production has been declining for three consecutive years. In 2024, it was down 13% on the year, with the worst shortage in supply in 60 years.  As a consequence, prices have been rising for the last two years, and were three times higher in 2024 compared to 2022.
• Butter supplies also run very tight due to adverse weather conditions, decreased production volumes, and due to lower global supply of milk from the US and New Zealand. Wholesale prices rose starting rising in October 2023.

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