The stark wake-up call from Miguel Patricio, the chief of Kraft Heinz, came as stores moved to hike the price of essentials like baked beans, bread and coffee by five percent. In a worst-case scenario, a further rise in January could tip inflation above 10 percent.
Mr Patricio said yesterday: “We are raising prices, where necessary, around the world.”
He said flashpoints contributing to the rising cost of food were “specifically in the UK, the lack of truck drivers”.
He added: “In [the] US logistic costs also increased substantially, and there’s a shortage of labour in certain areas of the economy”.
Experts say people will have to find an extra £500 to limp through winter, following a perfect storm of supply issues and rising energy costs.
By the end of the year, a typical family of four could be £1,800 worse off, says the Centre for Economics and Business Research.
Mr Patricio, whose company makes ketchup and baked beans, said higher food prices were here to stay because the world’s population is rising but the amount of land on which to grow food is not.
But he also said firms would have to absorb some of the cost rises, adding: “I think it’s up to us and to the industry and to the other companies to try to minimise these price increases.”
He said in the longer term, technology would help farmers and not all cost increases should be passed on to consumers.
Prices of staples including ketchup, cooking oil, cereals and drinks are set to soar. If the cost of a £1 loaf rises by 10p, then bread inflation is 10 percent.
David Sables, of Sentinel Management Consultants, said: “Shelf prices will go up five percent, but it won’t be enough.
“Retailers will communicate an additional four to five percent price increase which will go through in January.
“Across the next six to eight weeks I would expect to see something like five percent [increases].
“There is a chance now that when you add in extra fuel hikes and the CO2 issue, that hits prices as well. It may be that suppliers go a second time on their prices after Christmas.”
Britain is already reeling from mounting costs blamed on an acute shortage of lorry drivers and rising carbon dioxide costs.
Many hit by inflation-busting energy bills are increasingly fearful they will have to ditch lavish parties and make do this Christmas.
Many parts of the country have witnessed rows of empty shelves as the crises that torpedoed the UK supply chain sparked panic buying.
There have been scant supplies of bottled water, soft and alcoholic drinks, vegetables, meats, baby foods, and baked goods. Cleaning products are also increasingly hard to come by.
Britain now faces sky-high demand for oil and gas, which has pushed up the price of energy. It has led to higher household heating bills and increased costs for businesses, which have passed them on to customers.
The Government is also ending the support it gave businesses during the pandemic, meaning another likely rise in prices which will be passed on to consumers.
At the same time, companies are struggling to recruit workers to drive lorries, pick and process food and work in bars, hotels and restaurants.
The Consumer Prices Index measure of inflation is currently 3.2 percent, way above the Bank of England target rate of two percent.
Supermarket chain Morrisons has already warned of industry-wide price rises, while companies including Nestle, Procter & Gamble and Unilever say they will be forced to up theirs as supply chain problems rumble on.
Frozen food chain Iceland has warned “price rises are inevitable”, with similar warnings by Tesco and the Co-op.
Last month the Bank of England’s monetary policy committee voted unanimously to keep rates at 0.1 percent, an all-time low, despite annual inflation running at 3.2 percent, the highest level in more than nine years.
However, Michael Saunders, one of the Bank’s interest rate-setters, said investors were right to bet on faster increases in borrowing costs, with consumer price inflation on course to rise above four percent.
It adds to signs the Bank might become the first major central lender to raise rates since coronavirus struck.
The Bank’s governor, Andrew Bailey, said inflation running above the central bank’s two percent target was concerning and had to be managed to prevent it becoming permanently embedded.
He said: “We are going to have a very delicate and challenging job on our hands.”
A major concern is carbon dioxide price rises, which usually take 12 weeks to filter through to the high street meaning a massive leap In the New Year.
And millions of workers face being squeezed by a National Insurance rise that will add at least another £254 to an average earner’s tax bill.
Chancellor Rishi Sunak is due to deliver his autumn statement on October 27 as he faces huge pressure to claw back some of the eye-watering debt caused by Covid.
Between April 2020 and 2021, during the first year of the pandemic, the Government borrowed £299billion the highest figure since records began in 1946.
Kona Haque, of agricultural commodities firm ED&F, said: “Whether it’s corn, sugar, coffee, soybeans, palm oil…you name it, all of these basic food commodities have been rising.”
Last week Prime Minister Boris Johnson made former Tesco boss Sir David Lewis his new supply chain tsar. His mission is to end the blockages threatening to derail Christmas plans for millions.
An Office for National Statistics shopping audit from September 22 to October 3 said 17 percent of Britons had not been able to buy what they wanted. Nearly a quarter said the same for non-essential items.
Fifty-seven percent obtained everything they needed, but one in seven could not buy fuel, 43 percent said there was less variety and 14 percent had to go to more shops to get what they needed.
Many are also waiting longer for prescription items or having to go to more pharmacies to source what they need.
Ian Wright, of the Food and Drink Federation, said: “The outcome of what is and isn’t available at Christmas will be highly unpredictable.”
“In communities further away from distribution hubs, where a single lorry doesn’t show up at the local supermarket, that could mean hundreds of products aren’t available when people go in to do their Christmas shop.”
Unite general secretary Sharon Graham said: “The country is now in the ridiculous position of contemplating factory shutdowns because we now have unsustainable energy costs to add into the storm caused by supply chain shortages.”
Comment by Baroness Altmann
The UK inflation outlook has deteriorated dramatically. Global prices of raw materials, food, energy, chemicals, metals, pharmaceuticals and freight are rising strongly.
Covid disruption to our normal buying patterns, Brexit-related labour shortages and higher import costs have created an economic nightmare.
The Government needs to wake up to the reality hitting ordinary households. With the basic essentials of life, like food, drink, fuel and heating, becoming far more expensive, many will be pushed into extreme poverty. How will they afford to live?
Rising inflation makes it more important than ever to protect the most vulnerable. Leaving citizens unable to afford the basic necessities in 21st-century Britain is simply unacceptable.
Baroness Altmann is a social justice campaigner