The headline rate of inflation jumped to 9% in April. The Consumer Prices Index (CPI) recorded its highest level of increase since the early 1980’s in the 12 months to April 2022. According to the Office of National Statistics, almost three-quarters of the rise in the CPI index can be accounted for by increases in energy costs. However, food costs are another major source of inflation. The specific CPI Food index showed price growth of 6.7% in the 12 months to April.
This rise in ‘general’ inflation will be felt by farm businesses eventually as many of the ‘overhead’ costs such as labour, fees, office costs etc. are closely linked to the cost of living. However, agriculture has its own set of specific costs – many being linked to commodity markets such as grains, oils and gas. We have complied an ‘agflation’ index to represent this. This uses Defra Agricultural Price Indices for agricultural inputs and weights each category of input (e.g. animal feed) by the overall spend by UK farmers. We fill in some gaps not covered by the Defra series and also provide some up-to-date estimates for the latest months (the official figures work some months in arrears). The chart below show CPI along with our agflation index. It can be seen that farm input prices are estimated to have increased by over 30% year-on-year in April.