Government urged to prevent food price spike as shoppers worry Iran conflict will drive
Retailers have urged the Government to take action to prevent dramatic rises to food prices as war in the Middle East adds further pressure.
The British Retail Consortium (BRC), which represents household names from Tesco to Marks & Spencer to Primark, said that retailers are coming under strain from factors under the UK Government’s control – as well as from the wider world.
Its chief executive, Helen Dickinson, said ministers should not be ‘treating global instability as cover for inaction on costs of its own making’, after businesses have been hit with tax increases in recent Budgets.
Retailers have been hit with £6.5 billion in additional employment costs from hikes to employer National Insurance contributions and the National Living Wage, according to the BRC.
The industry group already met with the Government to ask for domestic policy changes after the outbreak of the war, which has pushed up fuel prices already.
But Dickinson said the UK Government has not moved fast enough to help businesses – unlike other European countries.
The group representing major supermarkets has said ‘not every pressure bearing down on retailers comes from the Gulf.’
The war – which started at the end of February – has caused gas and electricity prices to rise which has had a knock-on effect on logistics costs.
Public anxiety over the issue of food prices is rife, the BRC said, pointing to polling it commissioned through Opinium. It found that four in five people are worried that the war will result in higher grocery prices, while 73 per cent expect it to raise the price of other goods.
She said that retailers are doing their best to mitigate big price rises but firms need the Government’s help.
Dickinson added: ‘The Middle East conflict is driving up costs across the supply chain and families are right to be concerned. But not every pressure bearing down on retailers comes from the Gulf.
‘Higher National Insurance, packaging levies, new regulations, and business energy charges are all domestic policy decisions, made in Westminster, and they can be addressed there.’
She said that Germany has reduced electricity costs for businesses by moving levies off bills.
‘The UK should be moving in the same direction, not treating global instability as cover for inaction on costs of its own making,’ she said.
The industry – including the bosses of Asda and Marks & Spencer – has already asked the Government to remove levies that go towards energy policies and maintaining networks.
The BRC says that these costs, which are unrelated to wholesale energy prices, now make up between 57 per cent and 65 per cent of a typical business electricity bill.
Retailers have also asked for a delay to proposals that would force food manufacturers to reformulate ‘thousands of food lines’, as well as review new packaging levies.
Ken Murphy, the chief executive of Tesco, said last month that it is ‘doing whatever we can’ to keep food prices down but that the conflict creates ‘further uncertainty’ in its outlook for the year.
He added: ‘I think anything the government can do to help to keep prices low for customers is welcome. We would never say no to any help on things that could allow us to keep prices down.’
It comes as Asda boss Allan Leighton said in March that hiring young people involves ‘more hurdles than the Grand National’ and the Government has made it harder to create entry-level jobs.
And Marks & Spencer boss Stuart Machin said that it was ‘just not sustainable’ to heap extra costs onto firms’ bills to fund Government energy policies – from building nuclear power stations to maintaining the country’s power networks.
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