The price of household staples including food and drink could climb by as much as 20% in 2025 if challenges with sourcing and transporting goods continue, an industry body has warned.
The cost of electronics, machinery, chemicals and petroleum products could also rise, said the Chartered Institute of Procurement and Supply (CIPS), as a result of geopolitical instability, including tensions in the Middle East, supply chain disruption and cybersecurity issues.
Buying and supplying items including food and drink could cost businesses as much as a fifth more this year, which they will pass on to consumers, according to the international trade association, which represents 64,000 member organisations in procurement and supply chains across 150 countries.
The cost of everyday products could be pushed even higher if Donald Trump follows through on threats to apply tariffs to goods entering the US after his inauguration as president on 20 January.
International shipping costs have been rising in recent months as global freight companies faced a string of challenges in moving goods around the world.
Tensions in the Middle East and attacks on vessels travelling through the Red Sea by Houthi rebels prompted many major shipping firms to re-route their vessels around the Cape of Good Hope, adding cost and time to journeys.
Tens of thousands of port workers on the east coast of the US are threatening to reprise their industrial action, following last October’s strike, after they reopened contract negotiations with their employers.
Ben Farrell, the chief executive of CIPS, said: “What is clear from our research is that there are a number of strategic challenges that are likely to disrupt the smooth flow of goods and services … These will present particular challenges for consumers, who are likely to be disproportionately impacted unless these issues are managed effectively.”
The prospect of Trump following through on his threats to impose tariffs of 10% on global imports into the US, along with a higher 60% tariff on Chinese goods has already prompted some companies to bring forward container shipments of goods to avoid such changes.
However, pre-emptive measures such as stockpiling would only temporarily delay the impact of price rises, trade experts said, warning that any new levies could push up costs, disrupt trade flows, and spark retaliation against US exports.
The cost of machinery, chemicals, computer components and metals for businesses could rise by between 5% and 20% in coming months, a recent CIPS member survey found, without factoring in the cost of the tariffs themselves.
“The impact of US tariffs on trade flows, giving rise to increased political tension, the global war for talent – these and other issues will need deft handling if growth as well as consumer confidence across the major markets is to be maintained,” Farrell said.
