Foods suppliers have warned of price rises on staples such as bread, potatoes and pasta, in response to inflation and supply pressures linked to the war in Ukraine.
Farmers, importers and manufacturers have warned of increases of 4% and 50%. It comes after the wholesale cost of wheat rose by almost 50% in two weeks.
Ukraine and Russia together supply nearly a third of the world’s wheat exports.
Jason Bull, director of Eurostar Commodities, which supplies flour to many food producers, said: “We are in unprecedented times. We’ve had Brexit, Covid, global warming and now a war. Suppliers are cancelling contracts with immediate effect and putting in big increases. Freight costs are going up while stock is at sea.
“We have real worries about food price inflation and food insecurity. The situation was not good before the war and now it’s worse.”
Thomas Pugh, an economist at the accountancy firm RSM, predicts that the price of a loaf of bread, now costing about £1.20, will increase by up to 20%, or 24p.
Heineken warned beer drinkers last week that it would have to raise prices by around 15% because of “crazy increases” in the cost of raw materials, energy and transport.
A third of global barley supplies come from Russia and Ukraine.
The cost of potatoes is also expected to rise. Wilson’s Country, a distributor, says that the cost of producing, packing and distributing them will rise by at least 30%.
Lewis Cunningham, the managing director, told Farming Life: “Unfortunately we have no option but to pass these increases down the line to our customers.”
The Agriculture and Horticulture Development Board predicts that farm gate prices will rise by 3.4%.
However, it expects beef prices to remain more stable as supply from the Republic of Ireland increases.
How much are staples rising in price?
- Bread 10 to 20%
- Pasta up to 50%
- Beer up to 15%
- Potatoes up to 30%
- Milk 3 to 4%
*Based on price predictions
Reports this week suggested Russia’s war on Ukraine will add an extra £1,259 to the average household’s expenses in 2022.
The conflict will send prices for goods such as wheat and vegetable oils soaring, with inflation forecast to reach 8.7%, as sanctions pile pressure on supplies.
That is significantly higher the Bank of England’s projection of 7.25% back in February.
Oil and gas charges, rocketing again because of the conflict, will also drive prices up as food transport and production costs escalate.
The Centre for Economics and Business Research reckons the combined effects will slice £2,553 off household budgets in 2022.
About half the figure – £1,259 – can be directly attributed to the war in Ukraine, the CEBR said.
It urged Chancellor Rishi Sunak to take steps as the UK faces its worst fall in living standards since records began in 1995.
CEBR deputy chairman Doug McWilliams said Mr Sunak could cut fuel duty or temporarily reduce VAT.
He said help was essential because growth this year stands to fall from a previously forecast 4.2% to 1.9%.
The consultancy expects no growth at all next year. He said: “There has never been anything like it. It’s a semi-wartime effect. I don’t think the Chancellor can get away with doing nothing.”