A supermarket boss has warned that food price rises will “get worse” as the Bank of England prepares to hike interest rates to tackle soaring inflation.
The comments from Richard Walker, managing director of the Iceland supermarket chain, came after figures from the British Retail Consortium showed food inflation jumped from 10.6 per cent to 11.6 per cent last month.
With overall UK prices rising at a rate of 10.1 per cent in September, the Bank of England’s Monetary Policy Committee is set to raise the base rate by 0.75 percentage points to 3 per cent when it meets on Thursday - its biggest rise in 33 years.
A new poll, commissioned by the Liberal Democrats, showed just under one in four mortgage holders think their housing costs will rise by more than £250 a month next year - equating to more than £3,000 a year.
With households being hit by a triple whammy of rising food and energy bills, higher mortgage bills and the prospect of increased taxes to help plug a £50billion hole in the public finances, Mr Walker warned the squeeze on household budgets is set to worsen.
He told BBC Radio 4’s Today programme: “We are all seeing it aren’t we? That’s why the price of milk has gone up 50 per cent, not just in our shops, but all our competitors..bread, eggs, all staple items. That is worse for those struggling the most. It will get worse as well.
“I’ve got cost prices currently on the table from big branded suppliers that we haven’t stomached yet as a business let alone have to pass on to our customers.
“So I think it will get worse and coming into winter, we’ve got heating, we’ve got fuel, we’ve got food inflation. Food insecurity is inevitably on the rise and it’s the households with kids who are most at risk.”
Andy Clarke, the former chief executive of Asda, added: “It’s going to be a tough winter and food inflation is clearly just adding to the burden of families.
“For retailers, they’re doing everything they can, as are manufacturers, trying to find ways of reducing costs…but I think what we’re seeing is with everything they’re doing, they can’t protect the consumer as much as they’d like to.”
The BRC survey showed the sharp rise in the cost of food was partly down to higher costs for ingredients and energy. Helen Dickinson, chief executive of the BRC, said: “Even the price of basic items went up, with the price of the humble cuppa rising, as tea bags, milk and sugar all saw significant rises.”
With the Bank of England trying to bring inflation back under control, it is expected to keep raising rates well into next year adding to the misery being felt by millions of homeowners.
On Wednesday, the new Transport Secretary Mark Harper warned Chancellor Jeremy Hunt had to make difficult decisions on taxes and spending as the Government tries to restore market confidence in financial markets after the fallout from Liz Truss’s mini-budget in September.
But he insisted that setting out a credible fiscal plan on Novermber 17 would help push down inflation which in turn would restrict the rise in interest rates.
Mr Harper told Sky News: “The Prime Minister and the Chancellor have both been clear at the Autumn Statement we have got to set out a very credible fiscal plan and we are going to have to make difficult decisions.
“It’s important if we produce an autumn statement that is credible that means we will bear down on inflation more quickly...that means we will be able to have interest rates lower than they would otherwise have been which feeds through to people’s mortgages.”
The survey by the Lib Dems underlined the growing concerns over housing costs with thousands of Londoners braced for an increase in their monthly payments as variable and tracker rates rise and those protected by fixed term deals roll off those contracts in the coming months.
The survey found that nearly half of mortgage holders expect their mortgage bills to rise by more than £100 a month while 71 per cent of those with a mortgage saying they expect to pay more in housing costs over the next year.
Liberal Democrat Treasury spokesperson Sarah Olney MP said: “Millions of people are desperately worried about how they are going to pay these frightening mortgage payments after tomorrow.
“The Chancellor should address the nation after tomorrow’s interest rate decision to spell out a plan to help those facing mortgage bill rises worth hundreds of pounds a month. The Government cannot hide tomorrow, especially after their long list of recent economic failures.”
