Retailers will face a fresh onslaught of cost price increase requests from suppliers next month, which will heap yet more pressure on food prices, experts have predicted.
With food inflation growing at its fastest rate for 14 years, according to the latest figures, it is understood a comparative lull of CPI activity in the summer will be replaced by a fresh surge in the autumn.
The continuing impact of supply chain shortages, commodity prices and the war in Ukraine has seen no let-up in the financial squeeze facing suppliers. There has been speculation some will stop supplying unless they can pass on more costs.
Ged Futter, founder of The Retail Mind, said suppliers were facing such challenges to profitability that many would have no choice but to try to pass on the costs to supermarkets, even if it meant increasing the threat of delisting.
“There was a lull during the summer,” he said. “Buyers took a breath and suppliers recovered their position. But for a lot of suppliers, the current conditions mean that they are going to have to go again.
“For some suppliers it’s the second, third, fourth or even fifth time this year. Prior to that a number of suppliers hadn’t put through inflation for two to three years.”
Futter said the wave of requests would inevitably lead to clashes with buyers wanting to keep prices down during the so-called ‘golden quarter’ run-up to Christmas. However, he said suppliers could not afford to wait until January.
“It’s not a case of 12 weeks’ notice any more. Now suppliers are going to insist that it’s four weeks. These are costs that will be going up into November and it isn’t just big suppliers, it’s suppliers of all sizes.
“Suppliers simply can’t continue to supply at all costs. And if they stop supplying then it means gaps on the shelves.
“Its all very well wanting to keep prices down but if you’ve got no product to sell, all you have is a shelf edge label. That’s not going to help.”
David Sables, CEO of Sentinel Management Consultants, said retailers would be desperate to prevent cost increases in the Christmas period but predicted a “surge” of increases in the new year.
“It is a very bleak outlook for the consumer,” he said. “They are facing high energy and food costs and they are the two things that impact most.
“It’s also going to have a very bad impact on innovation because suppliers will be looking at closing down lines if they think that they have reached a ceiling for price increases.”
The warnings follow last week’s ONS figures, which showed food and non-alcoholic drink prices rose at an annual rate of 13.1% in August, up from 12.7% in July.
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