Raw material price inflation: how is it affecting you?

It has been widely reported here in the UK that inflationary pressures are beginning to ease. Lower inflation forecasts in turn create an expectation that raw material price rises should be a thing of the past. Our reality however is that, although we are optimistic that price decreases will come, we have not seen them yet and in fact had a further increase due to exchange rates in January this year.

How does it feel in your business sector?

A quick Google search throws up examples that indicate we are not alone and that many sectors are still feeling pricing pressures.

In the construction industry for example some materials are still attracting double digit price increases. For other materials, like timber, the forecast is more optimistic. As businesses have sought new suppliers and UK warehouses are subsequently better stocked, so prices may steady in 2023.

As raw material supply increases shouldn’t prices come down?

If supply and demand were the only factors affecting raw material pricing, then yes, we’d hope to see prices fall as supply improves. Obviously it’s not that simple though and there are many other factors at play here.

According to an article in the Financial Times in January 2023, the food sector is particularly exposed to outside pressures. It goes on to say that the food supply chain has been hit by price inflation in all three of their key cost categories; feed, fuel and fertiliser. Add to that the effect of wage pressures and a strong dollar, and you can see why the sector is not expecting to see price rises ease for at least six months.

One commentator from food processor Bakkavor said that he expected ‘significant’ price pressures to persist through 2023.

Indeed consumers have been directly affected by rising fuel prices in the food sector. That is to say, the  lack of tomatoes, cucumbers and peppers on our shelves is a direct result of UK farmers’ decision to reduce winter-grown vegetable production in a bid to save fuel.

What is Piroto doing to help customers?

We remain close to the market for labelling materials to ensure we are buying from the best possible sources worldwide.

In addition we have been successful in minimising material prices increases with our customers. This has included redesigning labels and tags to use raw material more efficiently, bulk printing and stock holding to deliver economies of scale and streamlining processes to bring label usage down.

Whilst we concur with the general view that raw material price rises have some way to go before we see significant improvement, we are working with our customers to make the best of the current situation.