In the first quarter of 2023, the inflationary pressure impacting processing costs for dairy products has had a differential impact. Electricity rose 9.9% compared to the previous quarter, but gas costs declined 2.3% and overall inflation (as measured by the Consumer Price Index) dipped by 0.9%. These changes will be implemented into the calculation for our market indicators AMPE and MCVE in the upcoming July publication (due out 25 July). When compared with figures from a year ago, electricity and gas were up 22.6% and 4.1% respectively in Q1 2023, while overall inflation was up by 9.0%.
Average processing costs within both AMPE and MCVE have moved up only marginally this quarter. Overall, AMPE costs are now 0.09ppl higher than in the previous quarter, while MCVE costs are up by slightly less at 0.07ppl. When compared to average processing costs in Q1 2022, costs have moved up by 0.9ppl for both AMPE and MCVE.
Note that this latest update only reflects cost inflation to March 2023, including data revisions. The next update will be in October 2023 following the ONS release of the 2023 Q2 cost indexes. A breakdown of the latest costs is given below:
The new costs include changes in:
- Energy costs based on the movement in the average prices of gas and electricity purchased by the manufacturing industry in GB as quoted by BEIS, up to Q1 2023.
- Labour costs based on the movement in the unit labour cost for the whole economy as quoted by ONS– these currently only go up to Q4 2022.
- Other costs based on the movement in inflation (CPI) from the 2020 update to Q1 2023.
For further changes and to see how costs impact your own business, we offer an online spreadsheet that allows you to enter bespoke costs and milk quality into the calculations. This will then calculate unique indicators based on your own circumstances.
