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Dairy market indicators adjusted for Q1 inflation
Thursday, 7 July 2022
Inflation in processing costs continued into the first quarter of 2022, albeit at a slower rate than in the final quarter of 2021. With the release of the latest data on average energy costs for Q1 2022, we have been able to adjust the cost elements of our market indicators, AMPE and MCVE. These will be implemented from July.
In Q1 2022, gas and electricity costs both increased by 8% on average compared to the previous quarter. This compares to quarter-on-quarter increases of 106% and 34% respectively in Q4 2021. Labour costs and inflation[1] were both up marginally from the previous quarter.
With the latest adjustments to processing costs, AMPE costs have increased by 0.35ppl, while MCVE costs have risen by 0.32ppl. Higher energy costs (gas and electricity) accounted for the bulk of the cost increases for both AMPE and MCVE, impacting production costs for drying powders in particular.
It is important to note that these figures only reflect cost inflation up to March 2022. The next update will be in October 2022 following the release of the 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 2022.
- 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 2021.
- Other costs based on the movement in inflation (CPI) from the 2020 update to Q1 2022
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.
[1] As measured by the Consumer Price Index (CPI)
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