The high cost of raw materials will result in food prices continuing to rise and remain higher “for quite some time,” according to Asda chairman Lord Rose. Many families trying to make ends meet will “suffer,” the Conservative peer said, despite businesses’ best efforts to keep prices down.
Price inflation is expected to reach 8 per cent this spring, according to the Bank of England.
However, Business Secretary Kwasi Kwarteng stated that inflation will not be long-term. Families in the United Kingdom have been trying to keep up with rising electricity, fuel, and food costs.
The Asda chairman told the BBC that he believes food costs “are going to go higher, and they are going to stay high for quite some time.”
According to Lord Rose, price pressures include the Ukraine conflict and a revival of Covid in China.
Oil and gas prices were already skyrocketing prior to Russia’s invasion of Ukraine, but the conflict has pushed them even higher.
As a result, raw material costs are rising for manufacturers and merchants, notably for meats like chicken and staples like pasta, with price increases passed on to consumers.
“Chicken feed is going up, and all the other associated costs are going up,” he said. “I see no quick solution to this. Pasta is made from durum wheat, and durum wheat has gone up in price, so that’s an inevitable cost increase.”
Due to the conflict in Ukraine, Co-op chief executive Steve Murrells told the Sunday Times that chicken might become as expensive as beef.
Nando’s, a chicken-focused fast food company, said that some of its pricing had increased in April.
Lord Rose stated that merchants “will do everything we can” to protect customers from rising raw material costs, but that they are “not immune from cost rises ourselves” and will pass them on to customers.
He explained that supermarkets have expenditures for employees, power, gasoline, insurance, and transportation, in addition to the cost of raw products.
“If you’re baking biscuits or baking cakes, [energy] goes into the cost of the raw material that you have to pass on [to consumers],” he said. “What we have to try and do is mitigate that.”
High inflation can have long-term impacts on the economy, such as “wage spirals” and “stagflation,” which occurs when prices and wages rise but the economy does not.
“They are both evil, and the government has got a very difficult and tricky road to navigate,” Lord Rose said.
He went on to say that 90% of Asda customers were “extremely concerned about the rising cost of living and how they will make ends meet.”
There is “clearly an issue with cost of living hikes,” according to Business Secretary Kwarteng, but “we don’t know how long it will remain.”
“Who can say how long any inflation will last?” he said. “It’s a global issue, there’s no doubt that every economy in the world is looking at the high prices and greater inflation.”
“By providing jobs,” he said, the government was “dealing with it.”
Because of the government’s “energy security policy,” which includes additional nuclear and offshore wind power generation, high inflation will not necessarily last for years, according to Kwarteng.
(Adapted from BBC.com)