Fuel Up, Food Up: UK Wholesalers Warn Energy Crisis Means Grocery Price Hikes

© REUTERS / PAUL CHILDS / Clubcard branding is seen inside a branch of a Tesco Extra supermarket in LondonClubcard branding is seen inside a branch of a Tesco Extra supermarket in London
Clubcard branding is seen inside a branch of a Tesco Extra supermarket in London - Sputnik International, 1920, 10.03.2022
Western sanctions on Russia and the decisions by UK energy giants BP and Shell to halt crude oil shipments since the outbreak of the conflict in Ukraine have sent prices at the pumps soaring — with a knock-on effect for other goods.
British wholesalers and road hauliers have warned that the new energy crisis prompted by the Ukraine conflict could also send the price of food soaring.
Federation of Wholesale Distributors chief executive James Bielby told the BBC that the increased fuel costs of transporting goods would inevitably be passed on to his members, retailers, and finally consumers.

"Food price inflation is already happening, but this is going to make it worse, because there'll be charges passed on to customers and then obviously to end users as well", Bielby said. "So, people buying food and drink in shops, when they're eating out, will be paying more because the cost of distributing those goods to the outlet has gone up so much".

With crude oil market prices hitting levels last seen just before the 2008 Credit Crunch, diesel pump prices are now around £1.60 per litre.
US President Joe Biden announced a ban on Russian oil imports this week, despite filling station prices topping $4 per US gallon — and over $7 in parts of California. Meanwhile, British energy giants BP and Shell announced they would no longer buy Russian oil, after BP said it was divesting from its one-fifth stake in Russian energy firm Rosneft.
With Russia, also the world's biggest wheat exporter and a major producer of fertiliser, threatening counter-sanctions against the US, UK, and European Union, food prices are already set to rise.
Bielby pointed out that fuel already made up 25 to 30 percent of the cost of distributing goods, and was now going up in price by 50 percent.
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The Road Haulage Association (RHA) urged the government to freeze the diesel fuel duty for the next two years and grant an "essential user rebate" for lorries, coaches, and taxis.

"It will have a significant impact on the sector", RHA policy lead for Northern Ireland John Martin said. "But ultimately the sector has to pass on any fuel increases to their customers. Ultimately it’s the consumer that pays the price at the pumps".

"Some of the larger companies have fuel adjustments built into their contracts, but the smaller operators may not have that and will have to be footing the bill themselves before they pass on the cost to the customers", Martin warned.
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