Chancellor meets UK supermarket bosses to discuss cost of living

The bosses of the UK’s biggest supermarkets are to meet the chancellor on Wednesday as the government seeks to gauge the extent of potential price rises and shortages of household essentials amid a surge in energy, fuel and fertiliser costs.Rachel Reeves is meeting the bosses of Sainsbury’s, Tesco and Morrisons as concerns rise about the potential impact on the cost of living – including higher food prices – as a result of the Middle East conflict.A Treasury source said the intention was to work with the supermarkets to identify any potential supply squeezes caused by the conflict, and to understand the likely impact on the cost of living in the coming months.“It’s very much a fact-finding, open discussion,” they said.Allan Leighton, Asda’s executive chair, is not expected to attend but has called on the government to “stand up and start doing stuff” to support farmers and ease the price of fuel, warning that food prices would inevitably rise as a result of the conflict.Simon Roberts, the boss of Sainsbury’s, has said prices are unlikely to rise until the summer as long-term contracts on energy and stores of fertiliser will keep a lid on costs for now.UK farmers and producers are warning that, without help from the government and support from retailers, there will be price rises and potential shortages.Domestic growers of tomatoes, cucumbers, peppers and aubergines said some could be forced to pull their plants out of the ground because of higher costs, which could result in gaps on shelves.Lee Stiles, secretary of the Lea Valley Growers’ Association, an area known as London’s salad bowl, is calling on the government to include food producers with glasshouses on a list of “energy-intensive users” – along with steel, chemicals, cement and glass producers – to help them with surging energy costs. Energy is required to provide the light, warmth and carbon dioxide needed to grow fresh produce indoors at some times of year in the UK climate.Stiles also wants retailers to renegotiate contracts with growers to reflect the surge in costs they have faced since the outbreak of the conflict in the Middle East. In addition, the impending increase in standing charges on 1 April – the fixed daily cost added to bills for accessing the UK’s gas and electricity network – will push energy bills even higher.“Growers have already bought plants and use labour to bring them up for three to four months so far,” said Stiles. “When you do the maths, they don’t add up.“They would lose less money by sending workers home, pulling the plants out and turning off the boiler. They would still lose money but less. It’s not much of a choice.”Some UK growers are expected to wait just a few weeks before deciding whether to cut the growing season short.If they decide not to continue harvesting fresh produce, Stiles warns that European glasshouses, which typically account for UK-destined salad production at this time of year, would struggle to pick up the slack, meaning there could be a repeat of the fresh produce shortages seen in early 2023.The British Poultry Council (BPC), which represents hundreds of chicken producers, said there were concerns about supplies of “oil, gas, fertiliser and essential feed components, resulting in knock-on impacts that are placing significant strain on the sector”.“These factors are creating sustained upward pressure on the cost of poultry production. While some increases may be absorbed by the industry, others will inevitably have to be passed on to consumers,” said the trade body.Richard Griffiths, chief executive of the BPC, said farmers were likely to have long-term deals on some necessities, such as energy bills, but other costs, such as diesel, would have a more rapid impact, and there were fears that medicines might not be available at any price.The government has said it is tackling the cost of living by cutting £117 from household energy bills, increasing the legal minimum wage and launching a £1bn crisis and resilience fund, which will help vulnerable households with costs such as heating oil.