More than four in five UK food and drink manufacturers expect to raise prices and a third are planning job cuts, according to a new Food and Drink Federation survey.
Publishing survey findings for the first quarter, the FDF said 82% of businesses expect to raise prices to manage rising costs, while 33% said they plan to restructure or reduce their workforce.
The findings are based on responses from UK food and drink manufacturers of different sizes.
According to the survey, the latest pressure on manufacturers stems from the Iran conflict and the resulting energy shock.
The findings came as the trade body reiterated a forecast it made in April that food and non-alcoholic drink inflation in the UK will reach 9-10% by December.
Citing the International Energy Agency, the FDF said war in Iran “unleashed the worst energy crisis in history, worse than the previous crises of 1973, 1979 and 2022 combined”.
“Higher inflation is unavoidable,” the FDF said, adding that, for the industry, the current crisis is “about higher costs, not shortages”.
Other steps companies said they are taking to manage the impact include changing procurement strategies, cutting marketing expenditure and pausing or cancelling capital investment projects.
Only 21% said they plan to make production more energy efficient.
Business sentiment also weakened sharply. “The industry confidence is in freefall, reaching levels comparable to those seen in the pandemic,” the FDF said.
The FDF’s net confidence score fell to -64% in Q1 from -31% in Q4 2025.
Some 67% of businesses said conditions deteriorated from the previous quarter, while the outlook confidence reading for Q2 was -51%, the weakest since records began in early 2022.
The report said 69% of respondents believe UK government support on energy costs would be the most effective measure to ease pressure on the industry.
For 51% of surveyed businesses, energy accounts for between 5% and 9% of their cost base, while for 8% it represents 20%-24%.
The report also found labour costs are continuing to reshape operations. More than half of respondents said rising labour costs are accelerating automation, while 47% said bonuses were being affected and 36% pointed to pressure on pay differentials.
