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Iceland boss warns food prices will get worse as we face 'perfect storm'

The boss of the frozen food chain said he expects to see further supply chain issues in the coming months.

Iceland's managing director says he expects food prices to continue to rise and some items to be in short supply, as the grocery industry faces a "perfect maelstrom of pressures". Richard Walker, managing director of the Deeside-based frozen food chain, said that the combination of energy costs, fertiliser and staff shortages are just some of the problems they are facing.

Speaking to BBC Radio Four as part of a feature on the pressures facing the grocery industry, he said the upcoming months are going to get "tougher" and that he wanted to be "upfront and frank" with customers.

Speaking about how the issues the company are facing now differ from previous pinch points in inflation he said: "The business was started by my dad, he will talk about the fact that we have had nearly no food inflation for 25 years and maybe we have got a bit too used to that as a society.

"But when I look back at our ads from the early 90s, we were selling 500g lasagne for £1 and guess what, we still are. As a proportion of income it has dropped, but we are still one of the lowest in the world I think.

"I think what I will say, and even he will admit, is that we have never had this perfect maelstrom of pressures before so it's not just an oil price shock like it was in the 70s, it really is end to end, everything across the whole supply chain."

The director said the cost of food across all major supermarkets has already risen, and forecasted it would continue to do so. He acknowledged that in Iceland, due to the rise in energy costs, fertiliser, feed prices and labour shortages, dairy was one of the most volatile sections of the store.

"A four pint of milk was £1, it's now £1.45, we don't make any money out of that price either." But this isn't the only area impacted, in the fish section of the store, sanctions are also added to the list of rising costs.

He said: "The sanctions against Russia, a lot of white fish comes from the Bering sea, so that markets closed off and we are having to look to the middle east so wherever you look there are pressures to the supply chain."

While energy prices have already risen this year, with prices set to rise once again in the autumn and again next year, Mr Walker said he wanted to be direct with customers about what they could expect in the coming months. He said, "Last year our energy bill was £60m, so if you apply a many-fold increase on that you can see the enormous rise in op[rational costs that we are facing."

"It's going to get tougher and we need to be upfront and frank about that because we've had stresses on harvests across Europe and I think that will start to affect the supply of certain products as we get into September and October onwards."

Energy prices could spike at as much as £6,000 per year for the average household from next April, experts have warned. The cost of living crisis is only set to get worse between now and next summer, as consultancy Auxilione predicted that the price cap on bills will gradually rise by more than £4,000 in the next eight months.

They said that the cap is expected to reach £3,576 in October, rising to £4,799 in January, and finally hitting £6,089 in April. The new forecast is an increase of £96 in January and £233 in April compared to the last one. The cap is currently at £1,971 for the average household.


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