Food inflation in the UK could reach 9% by the end of the year, even if the Strait of Hormuz reopens in the coming weeks, according to industry figures. The Food and Drink Federation (FDF) has predicted this rise, nearly tripling a pre-conflict forecast of 3.2%, as the Iran war drives up energy prices. Dr Liliana Danila, chief economist at the FDF, stated that the industry is already grappling with significant increases in energy, transport, and packaging costs, alongside supply chain disruptions.

Chancellor Rachel Reeves met with supermarket bosses on Wednesday to discuss mitigating the impact of cost inflation on consumer prices. Attendees included leaders from Tesco, Sainsbury’s, Morrisons, Marks & Spencer, Aldi, and Lidl. They reportedly urged the government to ease cost pressures through assistance with energy bills and delays to new regulatory fees, highlighting the broader economic strain.

UK farmers and producers have warned that without government support for soaring energy bills, shortages of domestic tomatoes, cucumbers, peppers, and aubergines could occur. Simon Conway, chair of the British Tomato Growers’ Association (BGTA), emphasized that many businesses renewing energy contracts from April face sharp cost hikes, potentially leading to bankruptcies later this year.

A government spokesperson described the meeting as "positive," with agreement to collaborate on reducing the cost of living for consumers and strengthening supply chains. However, in a BBC interview, Reeves did not commit to cutting fuel duty or VAT on petrol, cautioning that such measures could inadvertently push up overall inflation, interest rates, and taxes.

Overall, the UK economy faces mounting challenges due to rising energy prices and the fallout from the Middle East conflict. The projected food inflation level, even under optimistic scenarios, underscores the vulnerability of the regime to global crises, with potential severe implications for households and businesses alike.

Source: www.theguardian.com