Households face more price hikes as rising costs squeeze farmers

Households face yet more ‘painful price rises’ in supermarkets as farmers suffer soaring costs.

Shoppers already struggling with the cost of living crunch will see further increases to bills as farmers pass on some of their own steep price increases.

The Government’s latest Agricultural Price Index (API) showed farmers faced a record 33.1 per cent jump in input costs in the year to June. 

The increase was driven by animal feed, fertilisers and fuel – all of which have shot up in price.

And while farmers absorbed a large chunk of the increase, the price of goods produced on farms jumped 25 per cent in the same period.

Items which saw the biggest price increases were milk, wheat and rapeseed oil – all key ingredients in household staples such as bread and spreadable butter to chocolate and biscuits.

In the past year, the price of rapeseed oil being sold by farmers has shot up by 70 per cent, wheat by 55 per cent and milk by 42 per cent.

Those hikes come as farmers face a fertiliser bill that has more than doubled as well as 66 per cent higher energy bills and a 33 per cent jump in food costs. 

Shopping bills are already rising at 11.8 per cent per year, the fastest rate since 2008, according to Kantar. 

And the API figures raised fears this is only set to accelerate. Hargreaves Lansdown analyst Susannah Streeter said: ‘Costs for UK farmers keep surpassing record levels, sowing the seeds for more painful price rises for shoppers who are already struggling amid the painful cost of living crisis. 

Farms have been trying to absorb the eye-watering rise in costs, by finding new ways of working.

‘But there is a limit to what they can do, especially with the price of gas continuing to shoot up to record levels, so further price rises seem inevitable.’ 

A decision by CF Fertilisers to stop production of the key ingredient ammonia could also lead to further price hikes and gaps on shelves.

The firm, which was offered a £30million state bailout last year, supplies roughly 40 per cent of the country’s CO2. 

The gas is used for everything from the humane slaughter of chickens and pigs, to putting the fizz in soft drinks and creating packaging that keeps foods fresh.

A Whitehall source said some food and drink firms may suffer shortages but stressed that critical infrastructure demand would be met through a separate CO2 facility in Yorkshire.

The Daily Mail understands that another bailout will not be provided. The shutdown will come into force within the next two to four weeks.

Streeter said: ‘Livestock farmers face a potential double whammy of consequences due to the closure. 

‘Not only do they often use fertiliser on grass to feed animals, there is now set to be a shortage of CO2 gas, which is used to stun livestock before slaughter.’