The Lloyds Bank UK Sector Tracker has indicated that manufacturing costs for food may be starting to decline, giving hope that food inflation may have peaked.
In the tracker’s input costs table, the food and drink production sector registered 49.4, the first time it has been below 50 since 2016. In the tracker, 50 represents stable production costs, while higher or lower values represent rising or declining input costs, respectively.
The food sector also received some good news from the latest survey from Make UK and BDO, where the food and drinks sector performed better than expected. This caused Make UK’s researchers to revise their expectations for output growth in the sector to 0.3% this year, compared to their forecast at the end of last year of a 4.4% contraction.
The national head of manufacturing at BDO, Richard Austin, warned that manufacturing still faced some long-term challenges:
“Supply chain pressures are an endemic issue for the businesses we talk to, particularly medium-sized firms. They are facing continued disruption and increased costs, at home and abroad, with many choosing to onshore operations but facing major barriers in doing so.”
He added that policymakers should address these issues, so UK manufacturers can keep pace with those in nearby countries.
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