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Chancellor Rachel Reeves is scheduled to meet with supermarket executives to discuss the scale of possible price hikes and shortages of household essentials as the Middle East conflict causes fuel, energy and fertiliser prices to leap.
A Treasury source told The Guardian that, in a talk with the bosses of Sainsbury’s, Tesco and Morrisons, Reeves will aim to pinpoint any possible supply chain disruptions stemming from the conflict and to gauge how these issues might affect consumer prices in the coming months.
Allan Leighton, Asda’s executive chair, is not expected to attend but has urged the government to “stand up and start doing stuff” to support farmers and bring down the price of fuel, cautioning that the conflict would inevitably lead to an increase in food prices.
Simon Roberts, leader of Sainsbury’s, told The Guardian that food prices should remain steady until summer, thanks to fixed-price energy contracts and sufficient fertiliser supplies.
The meeting follows a previous breakdown in talks when supermarket chiefs felt they were being accused of “profiteering”, according to The Times. Supermarket executives allegedly viewed the tone and short notice of the summons as a setup for a public scolding, with only Morrisons head Rami Baitiéh agreeing to attend.
UK farmers and producers are cautioning that there will be price rises and potential shortages if the government does not step in.
British growers of tomatoes, cucumbers, peppers and aubergines said some could be forced to abandon current crops, leading to empty spaces on supermarket shelves.
This news comes after fresh data published by the British Retail Consortium indicated shop price inflation climbed to 1.2% in March, up from 1.1% the month prior.
Helen Dickinson, BRC chief executive, said: “Shop price inflation edged up in March, despite food inflation easing as dairy prices fell with lower wholesale milk costs. Retailers offered promotions on alcohol, TVs and sound systems in the run up to final Six Nations weekend, as well as on clothing & footwear to entice consumers to spend.
“Higher costs resulting from the conflict in the Middle East are starting to feed into supply chains. While retailers will work with their suppliers to mitigate the impact on prices as far as possible, inflation will rise, although there are no indications it will reach the peaks of the last spike in April 2023.”
She added: “Government needs to look at all the costs that could exacerbate these price rises, from new healthy food rules to trade changes with Europe, the Employment Rights Act and non-commodity charges which make up such a large proportion of energy bills. Ignoring businesses’ concerns risks even higher prices for shoppers.”
