FDI Business Monitor Q3 2023
Looming Spike in Labour Costs put Food and Drink Businesses Under Pressure
- FDI publishes its Q3 Business Monitor.
- Minimum wage increase is a business cost increase.
- Food prices remain high, but month-by-month growth appears to have slowed in September, according to the Consumer Price Index.
31 October 2023 - Food Drink Ireland (FDI), the Ibec group representing the food and drink sector, has warned that businesses in the sector are facing further increases to input business costs due to the incoming hike in the national minimum wage. The concern is raised as FDI publishes its Quarter 3 Business Monitor which highlights a range of economic factors that are impacting the food and drink sector.
The latest Business Monitor shows that commodity prices in general have stabilised in the summer months. Energy prices increased in Quarter 3, but overall prices are much lower than the same period last year. The forthcoming national minimum wage increase from €11.30 to €12.70 will lead to a significant increase in input business costs for SMEs, in particular.
The Business Monitor also shows that food and non-alcoholic beverages prices in September increased by 7.8% in the year but only by 0.4% in the month. The yearly increases are due to higher prices across a range of products such as vegetables, meat, bread & cereals, sugar, jam, honey, chocolate & confectionery and mineral waters, soft drinks, fruit & vegetable juices. The volume of retail sales (ex. bars & motor) increased by 2.0% when looking at the three-month moving average (June, July, August 2023) versus the same months last year, with the value of sales increasing 3.4% over the same period.
“The challenges associated with high inflation are likely to shift to increased labour costs arising from the forthcoming increase in the national minimum wage in January. This will pose a challenge to the food and beverage sector as it tries to manage staff retention with increased input business costs, throughout the supply chain. It is also worth noting that many businesses will be managing a significant transition to a Living Wage, pensions autoenrollment, and other significant labour market changes over the coming years,” according to Jonathan McDade, Deputy Director of Food Drink Ireland.