Energy price spike hitting food hardest as Jacob Rees-Mogg says Brexit is not to blame

Tue 5 Apr 2022
Posted by: Noelle McElhatton
Trade News

The food and drink sector has been hit far hardest by rising energy prices and supply chain problems, according to an Office for National Statistics (ONS) survey.

In March, six in 10 businesses in the food and drink sector said they were “affected” by the rise in energy prices, compared with 38% across all sectors, the ONS found.

Food prices rose by 3.3% in March compared with 2.7% in February, reports the Grocer.

Combination of factors

The ONS said the increases were driven by a combination of “supply chain issues, increasing costs and labour shortages”.

The FT reports that about one-third of respondents said they had spent less on food shopping and essentials in March, a strong increase from a few months ago, and adding weakening demand to manufacturers’ challenges.

Speaking on LBC, Brexit opportunities minister Jacob Rees-Mogg said rising food prices have “nothing to do” with Brexit, blaming global inflation rates.

The Independent reports that Rees-Mogg was challenged on LBC over previous claims that Brexit would make energy bills and food costs cheaper.

Global problem

“There is a global inflation in food prices which has nothing to do with Brexit,” he told a caller to the radio show. 

Rees-Mogg also claimed that post-Brexit trade deals would help ease the cost of living crisis – despite predictions by the CEO of 2 Sisters Food Group, Ronald Kers, that food inflation will hit 15% this year.

Manufacturing growth slows

March figures for British manufacturing show that it expanded at its weakest pace in 13 months and price pressures, which had previously shown some signs of moderating, worsened, reports Reuters.

The S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) fell to 55.2 in March from 58.0 in February. A reading over 50 indicate that the economy is still growing.

New orders sank to the lowest level since January 2021, due slowing domestic demand and the sixth drop in seven months for export orders.

S&P Global linked the weakness in export orders to geopolitical tensions, Brexit and ongoing difficulty with supply chains, though delays were their shortest since October 2020.