Agflation may have peaked, says Andersons

Both agricultural input and output costs are dropping in the UK, however, prices remain higher than two years ago.

Agricultural input prices have been falling for several months, with figures from consultancy firm Andersons putting them 3% lower in May 2023 than the same month last year.

Output prices for agriculture are also falling and are at present deflationary.

See also: 2022 farm incomes beat inflation challenge, Defra figures reveal

Despite falling prices, agricultural inputs remain 24% higher than two years ago, while agricultural outputs are 15% higher.

Presently, there is a lag between changes in agricultural prices and food prices, according to Andersons, with food prices still rising.

Office for National Statistics data found that the Consumer Prices Index increased by 18.4% in the 12 months to May 2023 for food and non-alcoholic beverages.

Analysts at Andersons said agricultural raw materials are one of several inputs that go into supplying food to consumers, with other inputs such as labour, energy, and packaging also significant, and traditionally much less volatile.

However, during the past two years volatility has been more prevalent across a range of areas including agriculture, energy, and labour due to major economic factors such as conflict in the Black Sea and Covid-19.