UK: Shoppers could face soaring prices for food and beer this Christmas

UK’s shoppers could face soaring prices for food and beer this Christmas despite the government’s deal to ensure essential supplies of CO2 continue, The Mirror reported on October 12.

CF Fertilisers, Britain’s main carbon dioxide producer, was forced to close down two of its UK plants - Cheshire and Billingham - last month following the rising price of gas.

The shortage had a major impact on numerous industries because CO2 is needed to stun animals for slaughter, produce fizzy drinks, extend the shelf life of food, help surgical operations and cool nuclear power plants.

In September, the government agreed to spend millions of pounds on bailing out CF Fertilisers – a private US firm – so that it could restart production at the Teesside factory.

Ministers have now brokered a longer-term deal, lasting until January, which will allow the plant to charge significantly more for CO2 in the coming months to ensure production remains viable.

It is unclear how much more companies will have to pay but food producers could face a possible fivefold spike in the cost of CO2 that could ultimately impact food prices.

It comes as retail industry experts warned that shoppers could face “disruption and frustration” over the festive period amid empty shelves as hundreds of thousands of people have started to stockpile groceries for Christmas.

According to the Telegraph, there is speculation that prices of CO2 could jump from £200 to as much as £1,000 a tonne.

The British Meat Processors Association said: "The industry has been given no detail on what the price will be or how it will be calculated going forward.

"We understand that Business Secretary Kwasi Kwarteng took the decision to temporarily exempt parts of the CO2 industry from competition law to facilitate this agreement.

"What we need now is some detail and transparency around how the new pricing structure will work.”

The deal was welcomed by Ian Wright, chief executive of the Food and Drink Federation, but he added: "The increased cost of buying CO2 is yet another burden on the food and drink industry, which is already facing enormous stresses.

“This will of course add more pressure on prices for shoppers and diners."

Carbon dioxide is a by-product of fertiliser manufacture and CF supplies around 60 per cent of the UK’s needs.

Following the government’s new deal, Business Secretary Kwasi Kwarteng said “critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.”

But there are fears that yesterday’s announcement does not address the industry’s dependency on a small number of companies that are at the mercy of gas prices.

The UK is facing a cost of living crisis, with inflation having seen a record spike in August. In addition, the coronavirus pandemic has heavily impacted global supply chains.

It comes a day after the boss of Kraft Heinz – the world’s fifth-largest food and drink company –warned people will have to get used to higher food prices.

Supermarket bosses in the UK – which faces the dual shock of Brexit and the pandemic – have recently warned of worsening conditions for consumers, such as rising prices and emptier shelves.

Despite the rise in food and energy prices, the government has pushed ahead with scrapping the £20-per-week universal credit uplift introduced during the pandemic.

The government said: "CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer."

15 October, 2021