Sainsbury’s and Unilever this morning became the latest fmcg giants to warn margins will come under pressure from “unprecedented inflation”.
And while Sainsbury’s CEO Simon Roberts vowed the retailer would do everything it could to “keep delivering the best value for customers”, Unilever warned further price hikes were on the way to mitigate an estimated €4.7bn of extra costs this year, despite having already pushed through price hikes of more than 8%.
Businesses and shoppers aren’t the only ones who should be worried about surging inflation. As the government is no doubt keenly aware, rising food costs can come at a heavy political price, too.
So it’s not surprising ministers are scrambling to find ways to keep a lid on rising food prices, with the cabinet reportedly this week discussing a plan to slash import tariffs on foods not widely produced in this country, such as rice and oranges.
PM Boris Johnson is among the ministers backing the move as a way to help soften the cost of living crisis, The Sun reported earlier this week.
According to The Times, former Cabinet Office minister Lord Frost thinks the government should go even further and also scrap tariffs on imports of foods that are widely produced in Britain, such as beef and lamb, to “bring our prices down to world levels and help with the cost of living crisis”.
Not everyone is in support of such an intervention, though. International trade secretary Anne-Marie Trevelyan has reportedly opposed the plans because any unilateral cut to tariffs would undermine the UK’s position in post-Brexit trade negotiations.
Indeed, it would be a strange move from a government hanging its hat on the already dubious success of our departure from the EU – and an admission that perhaps the UK should have taken heed of warnings over the impact of Brexit on food prices.
British farmers have also voiced strong opposition to such a move, which would “not even begin to deal with the problem” of high food prices, NFU president Minette Batters told journalists.
She’s got a point. The country’s food producers have already been pushed to the brink by surging costs, and the government should arguably be doing what it can to support a long-term future for UK production, rather than further undermining them by opening the doors to imports.
If Covid and Brexit have shown us anything in recent years, it’s that international food supply chains are subject to disruption, and domestic production is a vital component of sustainable food security.
For processors and supermarkets, of course, a cut in import tariffs would no doubt help ease the pressure on profits.
But, as Batters pointed out, it wouldn’t go far in addressing the complexity of the current problems facing the sector. Indeed, according to The Times, Trevelyan estimated cutting tariffs would have only a 0.4% impact on the cost of living.
Still, with Tory strategists reportedly considering an early 2023 general election, ministers might well be tempted to grab any short-term gains they can get.
While the pandemic and the war in Ukraine have provided an easy scapegoat, global history tells us voters don’t look kindly on governments who fail to act on rising food and fuel prices.
Not least when the government’s own policies (yes, I’m talking about Brexit) have so clearly contributed to the surge in costs.
Of course, what’s really needed to address inflation and ease the burden on both businesses and consumers is a comprehensive, long-term food strategy for Britain. But with the country in chaos, and Downing Street distracted by the Partygate probe, that’s unlikely to emerge anytime soon.
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