Chips and beer are set for price rises as the long hot summer combines with rising business costs to hit the traditional British Friday night dinner.
The price of fruit and veg, particularly potatoes, is likely to rise this autumn, the Co-op has said, due to limited supplies caused by the hot dry summer across Europe.
Tim Martin, the chair of the pub chain Wetherspoons, said his costs would be going up because of the imposition of the sugar tax, an increased national minimum wage and rent rises.
Steve Murrells, the chief executive of the Co-operative Group, which owns thousands of convenience stores as well as funeral parlours and an insurance firm, said: “That great summer we had has put a lot of pressure on availability of crops.”
Murrells said the fall in the value of sterling was also adding to food price inflation because it had increased the cost of imported goods: “It’s a bit of a perfect storm,” he said.
He suggested that increased competition from rivals in buying British-produced goods, in order to avoid shortages caused by any difficulties arising from Brexit, might drive further inflation in the longer term.
However, despite what the company called “a backdrop of increasing national uncertainty”, the Co-op delivered a 10% rise in sales to £5bn in the six months to 7 July. After £35m in rewards for Co-op members is stripped out, underlying group pre-tax profits more than tripled to £10m.
Sales at established food stores rose 4.4% as the company cut prices on everyday items and benefited from a combination of warm weather and England’s good performance in the World Cup, which created perfect barbecue party conditions.
The Co-op said it had some insulation from any problems with importing caused by Brexit because it sources a large proportion of its goods from the UK and has well-established links with British suppliers.
Murrells said the Co-op had so far chosen not to stockpile goods with a longer shelf life, partly because it believed that difficulties were likely to be centred on fresh foods.
He added that even if the Co-op quadrupled its chilled storage facilities at British ports, it would not “give us enough comfort” to protect supplies on heavily imported produce such as apples and strawberries.
“We are all keen the government hears our concerns,” Murrells said, reflecting comments made by several business groups earlier this week after the Brexit secretary, Dominic Raab, attacked companies for blaming Brexit for their woes.
Wetherspoon, like its rivals, has been affected by significant costs from a new sugar tax on beverages, a minimum wage increase, rent increases and higher power bills.
Martin said: “The company has had a reasonable start to the financial year, but taxes, labour and interest costs are expected to be higher than those of last year.”
Analysts have said brewers such as Heineken and Carlsberg are facing a rise in production costs of around 16% going into 2019 after the heatwave scorched harvests across Europe. The price of aluminium used to make beer cans is also up.
However, Martin was positive about the potential effects of Brexit, saying there could be a gain for business through “slashing protectionist EU import taxes” on products including wine.
The record heatwave and the World Cup also helped bring more people into Wetherspoon pubs. The company, which owns and operates more than 900 pubs in Britain and Ireland, said like-for-like sales rose 5.5% in the six weeks to 9 September.
