What is the severe shortage of essential goods in the British chain stores?
Why do chain stores in the UK offer quotas for some goods, including oil?
How has the Ukraine war affected the shortage of essential goods in British stores?
How much has the cost of food supply increased in the UK?
The Ukraine war has prompted British stores to quota oil. The war has made it difficult for British chain stores to supply raw materials to produce the products their customers need.
Quotas of goods in British stores
Lack of raw materials such as vegetable oils has led British stores to quota oil and re-use palm oil. “The national flower of Ukraine is the sunflower, and 80 percent of production comes out of Ukraine,” said Richard Walker, Managing Director of the Iceland Foods Group. This production has stopped, and we have to limit our reserves and switch to 2-litre oils instead of 5 litres. “But actually, the bigger impact is on our pre-prepared ready meals.”
Problems with stores in the UK in supplying goods
He added: “Reducing food waste is a huge priority for us as we continue to reduce our impact on the environment. We know that shelf-life plays a big role in creating surplus food, so we have found an innovative way to combat this within our stores online shopping.” Iceland is one of the fifty-year-old British chain stores with more than a thousand branches and is known for offering lower prices. It is not only in this store that oil is rationed; other British stores have done the same, and they have been forced to make this decision. “We know cost is key to many of our shoppers. This new initiative allows us to offer them the opportunity to reduce their weekly shopping bills and help reduce food waste,” said Richard Walker.
Rising food production costs in the UK
Vegetable oils are used in more than 50% of store products, From ice cream to cakes and pastries. It is clear that the conflict in Ukraine alone has not only pushed up prices, but oil prices have also risen, and that has pushed up the base price of everything. Raw material suppliers are putting pressure on the UK in terms of costs. There is also a shortage of products such as chemical fertilizers, as most of the materials needed to produce this product come from Russian potash mines.
British people vulnerable to inflation
In the UK, inflation in the food and energy sector targets low-income British citizens. The head of the Bank of England acknowledged that inflation in the food and energy sectors is targeting low-income workers the most. “We’re seeing this unprecedentedly large shock to real income in this country coming from abroad, it’s a term of trade shock. … And that is harming real income, we think that’s going to feed through to activity during the course of this year in a big way,” Andrew Bailey said in an interview. In the last three months, due to the terrible events in Ukraine, this inflation shock for the real incomes of the people has become much worse.
The negative impact of inflation on the low-income groups
He added: “I think it’s important to put that into the context of the shock that we’re seeing. We think the impact of this shock in terms of pushing down activity and down inflation will be much bigger. And therefore how we, sort of, calibrate the monetary policy needs to take that into account.” Look at the consumption patterns of people and divide people into income groups because of the high share of energy and food in the consumption basket that we all have to consume. Low-income people consume relatively more in this sector because they consume less in the non-essential items section. What worries me is that inflation makes low-income people more targeted than others. This inflation targets those with the least bargaining power in the labour market.
Increasing food supply costs
According to experts, the preferred food bill for British families is likely to increase by more than 30%. This is the shortage of wheat due to heavy rains in Europe and heatwaves in the US and Canada, the main wheat production areas. Harvest in Europe has dropped from 5.9 million tonnes needed to meet the demand to 3.7 million tonnes. Yield in the United States also fell 46 percent, and in Canada, it fell 32 percent from a year earlier.
Rising prices in world markets
Since mid-July, prices in international commodity markets have risen about 30 percent, and experts predict prices will rise even higher. Supermarkets often absorb rising prices rather than passing them on to customers, but they are currently facing a lack of delivery incentives. This could mean that buyers will feel the impact of rising pasta prices. Some farmers have terminated their contracts with pasta producers, and the producers have done the same with supermarkets. Buyers may be forced to accept an increase in pasta prices in the coming months due to low global supply and rising supply chain costs. The pricing trend is unbelievable. Prices are snowballing.
With the rising cost of living in the UK, households are reluctant to buy large and unnecessary goods, and people owe money to banks and credit institutions. Fearing shortages, people also buy and store several imported goods, such as sunflower oil, and mortgage applications are expected to decline. Last month, the Bank of England announced that the country was facing the highest inflation rate in three decades and that inflation would continue to rise as prices of goods and services continued to grow.