Tesco boss John Allan has acknowledged that British families are struggling with the soaring food costs and produce shortages, but he cannot predict when price hikes will peak. The Bank of England governor Andrew Bailey has urged businesses to reconsider before raising prices, but grocery bosses say they have no other choice than to react to the supplier's increased prices.
Mr Allan argued that Tesco's 4p profit margin was slender in comparison to other industries and refuted claims that the grocer was exploiting higher prices to increase profits. His comments come as millions of Brits brace themselves for a surge of bills this month, including a council tax bill top-up averaging £2,000 for the first time after an increase by £99.
Food and non-alcoholic drinks prices rose by 18.2% in February from last year's figure of 16.8%. This rise comes as a result of production issues related to Brexit coupled with supply chain disruption caused by Covid-19 restrictions worldwide.
The Office for National Statistics (ONS) reported on Wednesday that UK inflation jumped unexpectedly above the Bank of England’s target during March due primarily because households faced rising utility bills as well as more expensive petrol and clothes.
Experts suggest there could be more pressure ahead since it is becoming increasingly likely suppliers will pass along cost increases due not only from Brexit-related complications but also supply chain disruptions brought about by COVID-19 restrictions worldwide.
In conclusion, while it is uncertain how long this trend will continue, consumers can expect their budgets stretched further over these next few months if suppliers continue raising their costs at such rapid rates without any relief from government intervention or improved global conditions affecting supply chains.