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(Bloomberg) — British food and drink manufacturers plan to raise prices in response to higher costs caused by the Middle East conflict, a move that threatens to pile more pressure on households.
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More than four-fifths of producers surveyed by the Food and Drink Federation said they will pass on higher costs to customers after paying more for energy, transport, packaging, fertilizer and ingredients. Around a third plan to restructure or cut jobs, and more than a quarter plan to cancel or pause planned investment, the trade body said Thursday.
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“In the last inflation spike, companies made savings to absorb some of their rising costs, but now there’s little flexibility left to do this again,” said the FDF’s Chief Executive Officer Karen Betts. The government should work more closely with the industry “to shore up our resilience while helping shoppers manage a maelstrom of rising costs,” she added.
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The findings will raise fresh concerns about the impact of a prolonged conflict in the Middle East on the cost of living. Britons are already grappling with higher fuel prices and mortgage rates in the wake of the war, with domestic energy bills also now set to rise.
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Business confidence among food manufacturers has dropped to the lowest since the energy crisis after Russia’s invasion of Ukraine in 2022, the FDF report found. Most businesses surveyed expect things to get worse in the months ahead.
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To ease the pressure on households, Chancellor of the Exchequer Rachel Reeves last week privately proposed voluntary price freezes on food in supermarkets, though this idea was widely panned, including by grocer Marks & Spencer Group Plc.
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The UK is also bracing for potential shortages. Last month, the government drew up plans to prepare for potential food disruption due to a fall in supplies of carbon dioxide, which is widely used in the industry for everything from packaging to brewing and the slaughter of some animals.
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