Latest Trends In Freight and Food Inflation

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Are UK food prices about to start rising again?

While everyone celebrates the downward trend in UK inflation, a significant risk is emerging which could upset the party.

The UK food industry’s reliance on imported materials particularly from the Far East leaves us very susceptible to imported inflation. A key driver of import prices are shipping costs and they’ve been aggressively increasing since the start of the year.

The necessity for vessels from Asia to sail around the Horn of Africa has effectively reduced shipping capacity by 50%. This coupled with increasing congestion at Chinese ports has resulted in container shipping costs increasing by over 300% since the start of 2024.

Reviewing the UK Producer Price Index for Imported Material reveals the index has risen from 139.7 in January 2024 to 141.9 in April 2024. To date the impact of this on inflation has been offset by currency movement as Sterling has strengthened by 3.9% over the same period.

Looking forward we expect to see further significant increases in container shipping rates of anything between 25-50%. The uncertainty created by a UK General Election will most likely dampen Sterling strength in the short-term exaggerating the impact of higher shipping costs on input prices.

Reviewing recent history when Covid led to a meltdown in global supply chains and sky-rocketing shipping costs, input prices and subsequent higher inflation quickly followed.

We expect container shipping prices to remain high for the balance of the year and therefore companies heavily dependent on imported materials particularly in the food industry should consider alternative near shore options as a strategy to limit exposure to cost increases.

Should you wish to discuss options for spreading the risk on your food imports please get in contact with the team of ingredients specialists at Brusco who can advise on alternative options to minimise costs.

Andrew Ashby
Managing Director
Brusco Food Group

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