UK supermarket prices ‘to rise by 5%’ as supply chain costs increase

 

UK supermarket prices ‘to rise by 5%’ as supply chain costs increase

 

CO2 problem not yet taken into account, so there could be a second wave of rises in new year

 

Factors including increases in commodity and global shipping prices, as well as labour, driver and raw material shortages are having an impact on supermarket suppliers.

 

Mark Sweney

@marksweney

Fri 24 Sep 2021 12.55 BST

https://www.theguardian.com/business/2021/sep/24/uk-supermarket-prices-to-rise-as-supply-chain-costs-increase?CMP=fb_gu&utm_medium=Social&utm_source=Facebook&fbclid=IwAR31ZYcjJ_u8iOu_t3aqev4jT8yJueDSPZumNFGarJILVuafKKHjFnRzdV8#Echobox=1632484542

 

Shoppers can expect to see a 5% rise in supermarket prices in the coming weeks – with a potential second wave of increases in the new year – as retailers and suppliers pass on higher supply chain costs.

 

David Sables, the chief executive of Sentinel Management Consultants, which advises suppliers in their dealings with UK supermarkets, has had an unprecedented number of inquiries from clients planning cost-price increases.

 

Suppliers are facing rising cost pressure because of factors including increases in commodity and global shipping prices, and the impact of labour, driver and raw material shortages.

 

“As a result, there is such a pressure on suppliers at the moment, as well as the retailers, to pass those on because the costs simply aren’t sustainable without some form of cost price increase,” he said, speaking on BBC Radio 4’s Today programme. “We have never seen this level of suppliers coming to us speaking about planned cost price increases. I would expect to see across the next six to eight weeks something like 5% [increases] going across the board on to the prices on shelves.”

 

Earlier this month the supermarket chain Morrisons warned of “industry-wide” price rises. Analysts at Kantar are already seeing increases at supermarkets, recording a 1.3% rise this month, almost four times the 0.4% rise reported in August. Consumer goods companies such as Nestlé, Procter & Gamble and Unilever have also said they will be forced to increase their prices as supply chain problems persist.

 

Sables said the 5% increase in supermarket prices did not take into account the new added pressure of rises in CO2 pricing as supplies dwindle – suppliers give supermarkets about 10 to 12 weeks’ notice of intended price rises – which could mean further pain for shoppers early next year.

 

“There is a chance now that when you add in extra fuel hikes, and the CO2 issue, that hits prices as well,” he said. “It may be that suppliers go a second time on their prices after Christmas.”