Cost of food in supermarkets on the up as toxic cocktail of HGV driver shortage, Brexit ‘red-tape’, rising commodity prices and worker shortage hits, BRC says
A toxic cocktail of Brexit ‘red-tape’, worker shortages, rising commodity prices and transport costs is driving food prices higher, the British Retail Consortium has warned.
In September, food prices rose for the first time on an annual basis in six months, seeing a 0.1 per cent increase.
Supermarkets have been hiking pay packets for HGV drivers in a bid to attract workers, which is squeezing margins and prompting grocers to raise prices to protect their bottom line.
Challenges: A toxic cocktail of worker shortages, rising commodity prices and transport costs is driving food prices higher, the BRC said
Helen Dickinson OBE, chief executive of the BRC, said: ‘There are now clear signs the months-long cost pressures from rising transport costs, labour shortages, Brexit red-tape, and commodity costs are starting to filter through to consumer prices.’
Products for DIY and gardening have seen the highest rate of inflation since the summer of 2018, while the cost of furniture and electricals is also on the up.
The BRC said the price hikes were ‘indicative of unresolved shipping issues coupled with high demand.’
A paucity of lorry drivers has led to hefty delays in deliveries of food to supermarkets. Oil prices have also risen above $80 a barrel for the first time in three years.
A shortage of CO2 was also triggered by gas suppliers switching off production due to soaring wholesale energy costs, thereby hampering food production.
Ms Dickinson said: ‘It is inevitable that prices will continue to rise, but Government intervention would minimise the impact on consumers.
More expensive: In September, food prices rose for the first time on an annual basis in six months, seeing a 0.1% increase
‘Supply chains have been put to the test recently, with CO2 and HGV shortages. Government needs to find a long-term solution to the HGV driver shortage by expanding the size and scope of the new visa scheme for drivers from abroad so they can fill the gaps while new British drivers are trained.
‘Without this, these additional burdens to what is already a precarious trading environment, will affect the British consumer and the prices they pay for the goods they want and need.’
‘Ambient Food’, including tinned vegetables, inflation accelerated to 0.8 per cent this month, up from 0.3 per cent in August. This is below the 12- month average price increase of 1.3 per cent, but above the six-month average price increase of 0.6 per cent, the BRC said.
Shop prices eased by 0.5 per cent, against a 0.8 per cent drop in August, according to the BRC. This is the slowest rate of decline since January 2020.
Mike Watkins, head of retailer and business insight at NielsenIQ: ‘Disruption in the supply chain and increased input costs are now starting to feed through and food prices increased slightly from last month.
‘However low prices on seasonal fresh foods are helping to offset rising prices in ambient food. Whilst non food retailers have so far able to mitigate a lot of the impact, the outlook is for shop price inflation to return over the next few months.’
Race against time: A paucity of lorry drivers has led to hefty delays in deliveries of food to supermarkets