Since Russia invaded Ukraine in February, energy prices and fertiliser costs have surged, while certain products such as vegetable oil have also increased in price.
Although this has caused high production costs for businesses, the Food and Drink Federation has warned these increased prices have yet to hit consumers, despite inflation hitting 9.1 per cent in May.
Speaking to the Standard, Dr Liliana Danila, economic policy manager for federation, said: “It typically takes seven to 12 months for producer cost rises to filter into final consumer prices, which means that the real impacts of the conflict will begin to manifest towards the end of 2022 and start of 2023.
“In terms of products, most food and drink production is energy intensive, which means most manufacturers are impacted, and most products will see some price rises due to the significant rise in energy costs.”
Food inflation currently stands at 6.7 per cent but the Food and Drink Federation has warned that figure will rise to 15 per cent by the end of the year and may remain high next year as the impact due to the war.
“Food inflation will remain high during 2023 and it’s unlikely that it will return to lower levels any time soon,” Dr Danila added.
“The pandemic pushed up all costs: of agricultural commodities, labour, energy, international shipping, packaging, fertilisers, and we are currently in the midst of inflationary pressures brought on by the pandemic.
“The war in Ukraine gave a further push to prices of agricultural commodities, energy and fertilisers, which rose at an accelerated pace since the war started.
“So pressures on production costs have continued relentlessly, but these impacts are yet to filter through into final consumer prices.”
Speaking at a conference in Portugal this week, Andrew Bailey, governor of the Bank of England, Britons should expect higher inflation for longer than other economies.
As petrol and gas prices surge to record levels, he said: “Unfortunately, there is going to be a further step-up in UK inflation later this year because that is a product of the way the energy price cap interacts with the energy prices we have observed over the last few months.
"I think the UK economy is probably weakening rather earlier and somewhat more than others."