A toxic cocktail of Brexit ‘red-tape’, worker shortages, rising commodity prices and transport costs is driving up food prices higher, the British Retail Consortium has warned.
September food prices rose by 0.1% for the first time on an annual basis in six months. Products for DIY and gardening have also seen the highest rate of inflation since the summer 2018 and the cost of furniture and electricals is also on the up.
The cost of ambient food such as tinned vegetables increased by 0.8%, up from 0.3% in August. This is below the 12 month average price increase of 1.3% but above the six-month average price increase of 0.6%, the BRC said.
Part of the rises are due to supermarkets having to increase pay for HGV drivers in a bid to attract staff. This is squeezing margins and prompting grocers to raise prices to protect their bottom line.
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.
‘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.’
Mike Watkins, head of retailer and business insight at NielsenIQ said; ‘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.’