Business News Wales  |

Subscribe to the daily newsletter updates

Openreach section sidebar

Dev-Bank Wales MBO



Chancellor to Examine High Prices with Food Manufacturers

The Chancellor met with food manufacturers to raise concerns about the high price of food in the UK and discuss measures the government can take with industry to ease the pressure on households.  

Building on engagement between the Chief Secretary to the Treasury and the UK’s biggest supermarkets earlier this month, the Chancellor will ask food manufacturers to do what they can to support consumers. As crucial players in the supply chain to supermarkets, this follow up meeting with food manufacturers will help ministers better understand the challenges firms are grappling with as inflated prices continue to plague the economy. The food and drink manufacturing sector is the largest in the UK, accounting for nearly 20% of total UK manufacturing and employing almost half a million people across the country.

On the same day, the Chancellor met with the independent Competitions and Markets Authority (CMA) to discuss the scope of their investigations into road fuel and groceries markets, including the possible action they could take if they are dissatisfied with the level of competition in the sector which could be allowing higher prices to prevail.  The government wants it to be easier for consumers to compare the prices of products, and the CMA is currently reviewing the use of unit pricing both in-store and online in the groceries sector. The government will consider updating pricing rules, including by strengthening the Price Marking Order 2004 (Retained EU Law), after the CMA review has concluded.

While rising food prices in the UK are in line with the EU average and headline inflation fell by 0.3 per cent last month, food inflation grew to 19.2 per cent. Food inflation disproportionately affects low-income households, who spend more of their income on food and are less able to swap what they would usually buy for cheaper alternatives.

Chancellor of the Exchequer, Jeremy Hunt, said:  

“High food prices are proving stubborn so we need to understand what’s driving that.

“That’s why I’m asking industry to work with us as we halve inflation, to help ease the pressure on household budgets.”

Chief Executive of the Food and Drink Federation, Karen Betts said:

“We are looking forward to discussing the multiple drivers of food price inflation with the Chancellor, which have caused the fastest acceleration of food prices in a generation. Despite manufacturers’ best efforts in recent months to absorb rising costs in their margins, these have been both persistent and broad-based – from ingredients to energy and labour – making price rises unavoidable.

“We believe food and drink price inflation is close to its peak, and food and drink manufacturers will continue to work hard to keep prices as low as possible, conscious of the pressure on hard-pressed households.  Government can help too, for example by urgently reviewing upcoming packaging recycling regulations to make them more efficient, by working with us to address labour and skills shortages, and by keeping to a minimum the labelling changes required of companies as a result of the recent agreement with the EU on the movement of food and drink to Northern Ireland.”

The government has acted decisively to help struggling households with rising prices, pledging to halve inflation this year and taking action to bring down bills for families. This includes introducing the Energy Profits Levy on oil and gas companies to pay almost half of a typical household’s energy bills, freezing fuel duty and taking difficult decisions on government spending to make sure we do not fuel inflation further. One of the most generous support packages in Europe has also been rolled out, worth £3,300 per household on average over this year and last. Benefits and state pensions have been increased by over 10 per cent, up to £1,350 in direct cash payments are being made to millions of vulnerable households and record uplifts in the National Living Wage mean someone who is currently out of work and takes a full-time job will be over £7,500 better off.

Extra support has been put in place to help the most vulnerable with high food prices, including the £2.5 billion Household Support Fund which provides local authorities with money to support their communities with the cost of essentials, the £200 million Holiday Activities and Food Programme which supports children on Free School Meals with a nutritious meal during the holidays and an expansion of Free School Meals to all 5-7 year-olds.

The Prime Minister and Farming Secretary brought together representatives from across the UK food supply chain last week, where they outlined a range of measures to help strengthen the long-term resilience and sustainability of the sector and put farmers at the heart of plans to grow the economy.


Columns & Features:

24 July 2024

Emma Meets Luke Hodge, Director, b2b IT Services
People / Skills
19 July 2024

Change Management is an Essential Skill for Business Leaders
19 July 2024

Emma Meets Dewi Morgan, Head of Finance, CIPFA
19 July 2024

Connecting Wales Through Fibre Community Partnerships

In Other News:

Business News Wales //