Food and drink industry warns MPs of ‘terrifying’ price rises
Food and drink firms are seeing “terrifying” price rises , according to sector trade body, the Food and Drink Federation.
The industry has warned MPs of knock-on effects for consumers.
Food and Drink Federation boss Ian Wright told MPs that inflation is running at between 14%-18% for hospitality firms, the BBC reports.
The price rises for food firms’ ingredients would lead to consumer price rises, he said, describing the situation as concerning. The UK’s rate of inflation was 3.2% in August and is expected to rise further.
Bank of England governor Andrew Bailey recently warned it would have to act, and suggested that UK interest rates may soon rise from the historic low of 0.1%.
Mr Wright told MPs on the Business, Energy and Industrial Strategy select committee: “Inflation is a bigger scourge than anything else because it discriminates against the poor.”
The Office for National Statistics will publish the latest inflation figures for September on Wednesday. It is expected to rise further above the Bank of England’s target of 2% for longer than previously thought.
Make UK, the manufacturers’ organisation, said that inflation was becoming “baked in” among its members.
Stephen Phipson, chief executive at Make UK, told MPs that while there was a welcome rise in demand, many manufacturers are looking at 30% to 40% average increases in material costs.
“When people are able to get hold of materials they are passing those costs on which does imply to us that inflation is more or less baked in at this stage now,” he said.
“This is not a transitory inflationary demand – we are seeing really serious issues now in terms of price increases.”
Surging energy prices
Des Gunewardena, chief executive of high-end restaurant group D&D London, says his business has seen half of its costs rise, including surging energy prices.
He says staff shortages are his “number one issue” and has increased salaries by 10%.
The business has 1,700 employees across the UK and is currently 150 staff short, which he said could lead to a “nightmare situation” in the busier December period.
Table covers have been reduced from 400 on a Friday night at his Quaglino’s restaurant to between 300 and 350 due to staff shortages.
However, he said the restaurants have seen increased customer spending, so he is stocking up on specific champagne brands ahead of time, to pre-empt possible supply problems.
“I think we’ll have a very strong Christmas so there’s no need to panic yet, but I expect further inflation in January when there won’t be the same spending to offset the extra costs”.