Food price inflation

 

Various inflationary factors are pushing up the costs of food.

Following drought conditions in Brazil Coffee prices have risen by 70%, in the US Pork prices are up 40% in the past 12 months. Similarly Fruit has risen by 10% and Vegetables 5% over that period. In the UK this is translating into an annualised rate of food price inflation of 3.8%.

By 2018 it is estimated that the average UK Household will be paying an extra £850 per year for food. 

As affluent consumers in China and India demand a more Western style diet we are seeing the effects on the price of meat and other foodstuffs.

In the longer term the growing world population now around 7.25 billion is forecast to rise to 9.6 billion by 2050 further fuelling demand.

Food manufacturers are caught in a vice; the buying pattern for many continues to be “just in time” reflecting the need to keep inventories as low as possible.

However without the safeguard of a “buffer stock” they are now more than ever exposed to the harsh reality of having to “pay up” in order to secure the raw materials to keep their facilities in production.

At the same time suppliers will continue to face the problems of operating in the current economic background with buyers seeking to delay payment, renegotiate contracts etc.

The era of cheap food has long passed and with consumers still having to closely watch their expenditure companies will now more than ever be required to ensure they are operating at optimum efficiency.