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Hobnob, Jaffa Cakes set to become more expensive

A Mcvitie's Jaffa Cakes pack of 30 costs about £2. Photo: PA
A Mcvitie's Jaffa Cakes pack of 30 costs about £2. Photo: PA (PA)

Biscuit maker McVitie's said the prices of some of its most popular products, such as Penguins and Hobnobs, could soar by 5% due to labour issues and costly ingredients.

But it’s famous chocolate digestive biscuit is less likely to be impacted.

Parent company Pladis's UK managing director, David Murray, said: "Omicron disruption, absenteeism, and the rising cost of business going forward present a big challenge for us.”

"At the end of the day, like in many other categories, it will flow through to higher prices."

Higher labour costs are also part of the problem.

"We've dealt with substantial challenges in the past in the food industry - whether it's natural disasters, inflation in the economic crisis," Murray said, but added that this time "it's the compression of the challenge, combined with the scale of some of them," that is causing it to up the price of its products.

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"We’re kind of getting some sleepless nights. It’s really just testing our resilience."

Read more: Food and fuel prices push UK inflation to 10-year high

Murray did not say specifically how much the prices of products would go up by, but when asked if they would be in line with inflation, which was 5.1% in November, he said: ‘"You’re absolutely at numbers like that."

Palm oil, wheat and sugar have all risen in price, the company said, with the price of commodities in the UK rising by 15%.

It added that, along with the whole food and drinks industry, it has been navigating challenging times over the last 18 months due to periods of high absences in factories, ongoing issues with supply chain and recent shortages of HGV drivers.

It said it had taken a number of steps to broaden its supply base, build on good relationships with suppliers and continuously look at ways to optimise and improve productivity.

Currently on the Tesco (TSCO.L) website a Mcvitie's Jaffa Cakes pack of 30 costs £2 ($2.65) while a Penguin Original Milk Chocolate Biscuits pack of 16 costs £1.89.

UK inflation was at a 10-year high in the 12 months to November, thanks to rising fuel prices, clothing costs and price rises for food.

A price hike in second-hand cars and increased tobacco duty also helped push up the consumer prices index, which rose by 5.1%, up from 4.2% in October, the ONS said.

Average petrol prices were higher than ever seen before.

“The costs of goods produced by factories and the price of raw materials have continued to increase significantly to their highest rate for at least 12 years," said ONS chief economist Grant Fitzner.

Watch: What is inflation and why is it important?