Food company CEOs warn of higher prices in 2017

UK food prices are set to increase in 2017, say bosses at Cranswick and Finsbury Food.

The rise in cost of food products is linked to fall in the value of the pound post the Brexit vote and the cyclical upswing in commodity markets such as sugar and dairy.

Both sugar and diary are priced in US dollars, which in turn increase the cost for the UK food producers.

Commenting on the latest warning, Adam Couch, CEO of the LSE-listed food producer, Cranswick, told The Telegraph: "Prices in supermarkets will have to rise, it is an inevitable fact that you will see across the board in the new year. Something has to give. We absorb it, the farmers absorb it, the retailers absorb it but eventually the consumer will have to."

John Duffy, CEO at the UK speciality baker Finsbury Food, also voiced similar concerns. He said the current effects of hedging will fade out as the company runs out of current stocks. Duffy said the company will start new purchases at the new increased prices which in turn will lead to higher prices for consumers.

"The last couple of years we have probably had about 2.5pc to 3pc deflation...But forward buying is now significantly more expensive for anyone buying in sterling," Duffy was quoted as saying by the Telegraph.

Apart from increasing prices, Duffy added that his company would also make other changes to offset the rise in raw material prices. The changes include reducing the number of promotions at offer, reformulating products, changing varieties and pack sizes and finally improving the efficiency at its manufacturing plants, according to The Telegraph.

"It could be as simple as selling less chocolate orientated products if chocolate is more expensive...It could be that instead of a butter cream filling let's try a fondant," Duffy explained.

A recent open letter from the food and drink industry groups in the country had warned that food prices would rise if EU workers leave the UK.