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Food prices could rise within weeks if the Iran war continues and there is a “big worry” that they won’t come back down, a trade expert has warned.
Rising shipping, insurance, fuel and energy costs, combined with cancelled flights, could lead to consumers paying more in stores, James Mills, head of trade policy for Logistics UK, said.
Despite the country having resilient supply chains, the Iran conflict has caused suppliers to re-route their stock, which makes the journey more expensive and causes delays.
Instead of going through main shipping channels, some suppliers are rerouting about 6,000km around Africa’s Cape of Good Hope, causing two-week delays and higher costs, Mills said.
Why impact could last months
The British Retail Consortium (BRC), a leading trade association for UK retailers, has warned that goods being redirected via longer routes could have potential knock-on effects on availability and prices due to higher shipping costs.
At the same time, fuel prices have been going up, with a barrel of Brent crude oil hitting more than $100 at the start of this week before falling back.
“If the conflict continues, people may notice that energy price rises continue and that feeds into higher transport and production costs and that gradually feeds into higher food prices,” Mills said.
“It will be weeks or months before things feed through.”
This is because most supermarket suppliers buy goods in advance, and will bulk-buy fuel to try to mitigate the risk of prices rising.
Perishable goods would be impacted the quickest, Mills said.
“I’d say fresh produce and those areas will probably be more sensitive to air cargo capacity being constrained. Anything that’s sensitive to energy markets will obviously be impacted by that as well.”
Andrew Opie, director of food and sustainability at the BRC, said: “There are also concerns about the effect on inflation and overall pricing if energy costs remain elevated for an…
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