- According to the BRC, the cost of food increased by 0.1% in September
- DIY and gardening products see highest inflation since summer 2018
- BRC says government should expand visa scheme for HGV drivers from overseas
The British Retail Consortium has warned that a toxic cocktail of Brexit ‘red-tape’, labor shortages, rising commodity prices and transport costs are driving up food prices.
In September, food prices increased by 0.1 per cent on an annual basis for the first time in six months.
Supermarkets are increasing pay packets for HGV drivers to attract workers, which is shrinking margins and prompting grocers to raise prices to protect their bottom line.
Challenges: A toxic cocktail of labor shortage, rising commodity prices and transportation costs is driving up food prices, BRC said
BRC Chief Executive Officer Helen Dickinson OBE said: ‘There are now clear signs that rising transportation costs, labor shortages, Brexit red-tape, and commodity costs are starting to filter through to consumer prices.’
DIY and gardening products have seen the highest rates of inflation since the summer of 2018, while the cost of furniture and electricals has also been rising.
The BRC said the increase in prices is “an indication of unresolved shipping issues with high demand”.
The lack of lorry drivers has resulted in huge delays in the delivery of food in supermarkets. Oil prices have also risen above $80 a barrel for the first time in three years.
The CO2 shortage also resulted from gas suppliers shutting down production due to rising wholesale energy costs, which hampered food production.
Ms Dickinson said: ‘It is inevitable that prices will continue to rise, but government intervention will reduce the impact on consumers.
More expensive: In September, food prices rose 0.1% on an annualized basis for the first time in six months
With the reduction of CO2 and HGV, supply chains have been tested recently. The 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 coming from abroad so that they can fill the gaps while training new British drivers.
‘Without this, for what is already an uncertain business environment, these additional burdens will affect the British consumer and pay for the goods they want and need.’
‘Environmental food’ inflation, including packaged vegetables, rose to 0.8 per cent this month from 0.3 per cent in August. The BRC said this is less than the 12-month average price increase of 1.3 percent, but above the six-month average price increase of 0.6 percent.
According to the BRC, shop prices declined by 0.5 per cent as against a 0.8 per cent drop in August. This is the slowest rate of decline since January 2020.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, said: ‘Supply chain disruptions and increased input costs are now starting to feed in and food prices have increased slightly over the past month.
‘However, lower prices on seasonal fresh foods are helping to offset rising prices in ambient food. While non-food retailers have been able to cushion much of the impact so far, shop price inflation is likely to bounce back in the next few months.
Race against time: Food delivery in supermarkets has been severely delayed due to paucity of lorry drivers