Data released yesterday showed that the annual UK Consumer Price Index inflation was 2.7% for October, up from 2.2% in September.
Downsizing treated as price increase
University tuition fees were the largest contributor, but the food and drinks sector, where prices rose 0.5% from September to October, was also responsible for the rise, particularly confectionery.
“The main upward pressures came from potatoes, fruit and confectionery,” said ONS.
“In the case of the last of these, a number of confectionery products have reduced in size. This is treated as a price increase in the Consumer Price Index and Retail Price Index as consumers get less for their money,” it continued.
Obesity fears prompts calorie cap
Manufacturers have been under pressure to cut calories in products to tackle growing obesity levels with many major confectioners such as Nestlé, Mars and Mondelez International signing up to calorie caps. See HERE.
Mars announced earlier this that it would reduce calories in its global chocolate to 250 or less by the end of 2013.
Smaller Quality Streets and Dairy Milk
One way to cut calories is to reduce product sizes.
In September, Nestlé cut the size of 1 Kg Quality Street tins to 820g, which it said followed a move by Mondelez last year to shrink Roses and Cadbury Heroes tins.
Mondelez also came under fire from some sections of the National press for cutting two chunks from Cadbury Dairy Milk bars and removing a triangle from some Toblerone products earlier this year.
Consumer watchdogs such as Which? have criticized manufacturers for reducing the size but keeping the same price.
Manufacturers argue that price points are set by retailers.
Manufacturing costs up
Producer prices also rose in October, according to ONS figures.
Input prices for food and drink manufacture were up 3.3% for the month compared to last year.
Costs for producing confectionery in the UK were up 3% in October compared to the average figure for 2011.
Cocoa prices have relaxed in recent months, but would have had little impact on manufacturers that tend to hedge in advance to guard against fluctuations.
Academics and producers such as Blommer Chocolate have warned of a looming cocoa supply crisis as pests, diseases and improperly trained farmers serve to threaten crops. See HERE.
Cocoa prices hit highs of $3,525 per ton in January 2010, but were down to around $2,464 last month, according to the International Cocoa Organization’s monthly averages of daily prices.