Higher utility bills force manufacturers to pass on increased costs to consumers.
According to Bloomberg, food producers across Europe are contending with soaring energy prices, with the increase quickly felt in the pockets of consumers dealing with a cost-of-living crisis.
According to the report, which cites a Bank of England forecast, one-third of UK households will spend more than 10% of their income on energy, and rising grocery prices are driving up food poverty.
"It's the domino effect of us having to take a huge increase in energy," Ryan Peters, managing director of Brioche Pasquier UK, told the outlet. "We have to try to raise our prices to retailers a little bit, which unfortunately passes on to consumers," he explained.
"I think the worst is yet to come as energy prices rise," Kona Haque, head of research for commodities trader ED&F Man, warned. This winter will be a game changer, and processing costs will almost certainly rise."
Suedzucker AG, Europe's largest sugar beet producer, reported a "substantial increase" in raw material, energy, and packaging costs in the first quarter.
Companies that make cooking oils from soybeans, rapeseed, and sunflower seeds are reportedly slowing production in the UK and Europe and shifting production to other regions with lower energy prices.
Meanwhile, Bloomberg warned that if natural gas shortages lead to rationing, energy-intensive food factories across the continent could be forced to close.
"We're having to manage highly volatile energy and input costs, making sure every penny our business spends and receives as income is actively managed in real-time," Tate & Lyle Sugars senior vice president Gerald Mason was quoted as saying by the outlet. "We are not operating a casino." We're making food, so it's our responsibility to get it right."