Chancellor meets UK supermarket bosses to discuss cost of living | Business
Bosses of Britain’s biggest supermarkets will meet the Chancellor as the government tries to gauge the extent of possible price rises and shortages of essential goods due to soaring costs of energy, fuel and fertiliser.
Rachel Reeves is meeting bosses at Sainsbury’s, Tesco and Morrisons as concerns grow about the possible impact of conflict in the Middle East on the cost of living, including higher food prices.
A Treasury source said the aim was to work with supermarkets to identify possible supply squeezes caused by the conflict and understand the likely impact on the cost of living in the coming months.
“This is more of a fact-finding, open discussion,” they said.
Asda chief executive Allan Leighton is not expected to attend but called on the government to “stand up and start doing something” to support farmers and ease fuel prices, warning that food prices will inevitably rise as a result of the conflict.
Sainsbury’s boss Simon Roberts said prices were unlikely to rise until the summer as long-term contracts for energy and fertilizer storage would limit costs for now.
Farmers and producers in the UK are warning of price rises and potential shortages without government help and support from retailers.
Local tomato, cucumber, pepper and eggplant growers said some may have to pull their plants from the ground due to high costs, which could lead to gaps on the shelves.
Lee Stiles, secretary of the Lea Valley Growers Association, an area known as London’s salad bowl, is calling on the government to include steel, chemicals, cement and glass manufacturers, as well as food producers with greenhouses, on the list of “energy-intensive users” to help with rising energy costs. Energy is required to provide the light, heat and carbon dioxide needed to grow fresh produce indoors at some times of the year in the UK climate.
Stiles also wants retailers to renegotiate contracts with manufacturers to reflect the increase in costs they have faced since the outbreak of the conflict in the Middle East. Additionally, the upcoming increase in fixed charges on April 1 – the daily fixed cost added to bills for access to Britain’s gas and electricity grid – will push energy bills even higher.
“Growers have already purchased plants and used three to four months of labor to grow them so far,” Stiles said. “When you do math, it doesn’t add up.
“They would lose less money by sending workers home, dismantling the facilities, and shutting down the boiler. They would still lose money, but less. That’s not much of an option.”
Some growers in the UK are expected to wait just a few weeks before deciding whether to cut the growing season short.
Stiles warns that if they decide not to continue picking fresh produce, European greenhouses that supply salad production for the UK at this time of year may struggle to fill the gap, meaning a repeat of the fresh produce shortages seen in early 2023 could occur.
The British Poultry Council (BPC), which represents hundreds of chicken producers, said there were “concerns around the supply of oil, gas, fertilizer and key feed ingredients, leading to knock-on effects that are placing significant pressure on the industry.”
“These factors are putting continued upward pressure on the cost of poultry production. While some increases will be borne by the industry, others will inevitably need to be passed on to consumers,” the trade body said.
BPC chief executive Richard Griffiths said farmers would enter into long-term agreements for some needs such as energy bills, but other costs such as diesel would hit more quickly and there were fears medicines would not be available at any price.
The government said it was tackling the cost of living by cutting £117 from household energy bills, increasing the legal minimum wage and launching a £1bn crisis and resilience fund to help vulnerable households with costs such as heating oil.
