AMPE and MCVE updated to reflect latest costs in Q4 2023

Processing costs for dairy products were subject to inflationary pressures in the fourth quarter of 2023, reducing the value of our market indicators AMPE and MCVE. These changes will be implemented in our latest publication on 25 April.

In Q4 2023, electricity increased by 5.4% and gas increased by 9.3% compared to the previous quarter. Inflation (as measured by the Consumer Price Index) increased marginally by 0.5% on the previous quarter. When compared with the same quarter previous year, there was a differential impact. Electricity and overall inflation rose by 4.4% and 4.3% respectively while gas was down by 5.3%.

The net impact of the latest quarterly cost increases is for the average processing costs within both AMPE and MCVE to move up on the quarter. Overall, AMPE costs are now 0.28ppl higher and MCVE costs are 0.27ppl higher than the previous quarter.

Energy prices continue to remain at historically high levels. When compared to average processing costs in Q4 2022, the AMPE cost has moved up by 0.43ppl and the MCVE cost has increased by 0.48ppl.

Note that this latest update only reflects inflation to December 2023, including data revisions. Labour costs have been carried over from Q2 due to a delayed data publication from ONS. The next update will be in July 2024 following the ONS release of the 2024 Q1 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 Q4 2023.
• Labour costs carried over from Q2, based on the movement in the unit labour cost for the whole economy as quoted by ONS - due to a delayed data release Q4 data was not available at the time of this publication.
• Other costs based on the movement in inflation (CPI)from the 2020 update to Q4 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.