Farmers and consumers can expect food, fuel, and energy prices to increase further as a new cost of living crisis continues to put pressure on Northern Ireland households, says Cormac McKervey, Senior Agriculture Manager of Ulster Bank and Richard Ramsey, the bank's Chief Economist.

Speaking in Belfast on Tuesday to members of the Guild of Agricultural Journalists, as well as other stakeholders, on the overall health of the local farming and food sectors and related economic issues they said the industry faced major challenges at present.

Cormac McKervey, said: “Undoubtedly, farmers in Northern Ireland are operating through very challenging times and the pace and scale at which input costs continue to rise is alarming. Farm gate prices for beef, lamb, grain, and milk are at an all-time high but margins remain static and, in some cases, are actually lower than this time last year.

“Many farmers are having to manage their cash flow extremely carefully, and while profitability has yet to dip, certain sub-sectors of the industry are being exposed to greater risks. Pig farmers are facing the most significant impact with input costs rocketing and the price for pork falling throughout the year.

“Land prices remain strong, and the demand is still high, yet we expect the majority of farmers to adopt a holding position rather than look to expand, given the other budgetary pressures currently facing the sector. Perhaps when Tier 2 approvals are received, then we will see an increase in overall capital investment.”

Richard Ramsey presented his annual Ulster Bank Ulster Fry Index, which shows that the price of all items making up the cooked breakfast gauge rose in the year to the end of February, using the UK Retail Price Index (RPI).

Milk saw the biggest price increase in the index with a rise of 16.7% in the 12-months. There were also strong rises in the prices of a range of other items including eggs (8.2%), butter (6%), mushrooms (7.1%), bread (5.6%) and sausages (4.3%).

Overall, the Ulster Bank Ulster Fry Index – the average inflation rate of the items included - rose by a robust 6.4% in the past year, meaning that the index is at its highest level since March 2014.

Richard Ramsey says that the Ulster Fry Index contains a more important message this year than ever.

He stated; “Food makes up a significant proportion of household spending. ‘Food and drink’ is also a key sector of the Northern Ireland economy. So, understanding how the price of food items is changing gives us some insight into both the current state of consumer finances, and also some of the challenges facing the agri-food industry,” Mr. Ramsey says.

“The fact that we are now in a new cost of living crisis means that creating understanding of price rises and cost pressures and where they are coming from is essential. What the Ulster Fry Index is telling us is that the prices of everyday items like milk and bread are rising really strongly at a time whenever households are also having to contend with big rises in their household energy bills.

“The reality though is that the Ulster Fry Index is only going to go one way in the foreseeable future, and that is up. Given the surge in energy prices already, alongside the disruption to the global food supply-chain stemming from the war between Russia and Ukraine, the Ulster Fry Index is expected to experience double-digit inflation over the next 12 months. This would see the Ulster Fry Index hit a new record high,” he continued.