Food and drink companies report ‘substantial’ inflation

Cost of transport, shipping, energy, raw materials and packaging has risen for sector

Cost of freight containers has ‘exploded’ for exporters, said FDI. Photograph: iStock.

Cost of freight containers has ‘exploded’ for exporters, said FDI. Photograph: iStock.

 

Irish food and drink companies have reported “substantial” increases in their input costs over the last 12 months as a result of Brexit, the Covid-19 crisis, global supply chain constraints and the rising price of raw materials.

Food Drink Ireland, which is part of employers’ group Ibec, said its members were experiencing inflationary pressures across most headings.

About a quarter of its members said they had seen an increase in transport and shipping costs of more than 20 per cent, while more than a fifth said energy costs had surged more than 20 per cent. Cost increases of 10-20 per cent for raw materials and packaging were also common.

Very few companies reported no increase in costs across these four categories, while only a fifth said there had been no rise in their insurance premiums.

Food Drink Ireland said its members had experienced “lower but still significant” increases in the cost of labour and water/wastewater.

Brexit factor

All 27 members surveyed by the organisation last month cited Brexit as a “very relevant or relevant” factor, while almost all agreed that the pandemic and global supply chain constraints were “very relevant or relevant”.

Brexit has increased the cost of trade with the UK and also trade with the EU using the UK land-bridge, while transport costs have also been affected by a driver shortage and the soaring cost of freight containers since the beginning of 2021.

FDI director Paul Kelly said the inflationary trend was expected to continue in the months ahead, hurting margins and export competitiveness.

He called for the rapid rollout of funding to the sector from the Government’s Brexit Adjustment Reserve and a renewed Government focus on ways to reduce the cost of doing business.