Some food bank users are declining items such as potatoes as they cannot afford the energy to boil them, the boss of the supermarket Iceland has said, as the soaring cost of living pushes vulnerable groups to the financial brink.
Richard Walker, who says the 1,000-stores in the budget chain are in the “poorest communities in the UK”, also called on the government to help businesses that are being forced to increase prices significantly as their own costs dramatically increase.
“I think the cost of living crisis is the single most important domestic issue we are facing as a country,” the Iceland managing director told the BBC Radio 4 Today programme. “It is incredibly concerning. We are hearing of some food bank users declining products such as potatoes and other root veg because they can’t afford to boil them.”
The cost of living continues to rapidly increase, with inflation rising to a three-decade high of 6.2% in February, according to figures from the Office for National Statistics, fuelled by the rising cost of petrol and diesel and a wide range of goods from food to toys and games.
Annual food price inflation was 5.1%, the ONS said. Food prices rose by 0.9% between January and February – the largest monthly increase since 2012.
Walker said that, in reality, the inflation on food was actually “pushing 10%”, and was already higher on items such as milk because of the cost of all the processes involved in producing it.
He said that while some issues affecting inflation, such as supply shortages, would eventually ease, others would not, and, ultimately, the age of cheap food shopping in the UK might be over.
“Systemically, if you look at it you could argue food has been too cheap for too long but [price increases] have to be matched in wages and productivity and everything in between,” he said. “We are doing everything we can, our customers are depending on us for that value, but of course the pressure is relentless and coming at us from all angles at the moment. We are not an endless sponge that can soak it all up.”
Walker said the chancellor, Rishi Sunak, who is to announce a mini budget in his spring statement on Wednesday, could alleviate the pressure on businesses and help consumers. He suggested the energy price cap on households could be extended to businesses, potentially paid for by a “windfall tax” on the rocketing profits of energy companies. That could mean an extra £100m saving on consumers, he said, promising that Iceland “would pass on every penny”.
Walker also said the government could perhaps delay the introduction of the increase in national insurance, and postpone the introduction of environmental taxes, which he said would cost Iceland £16m this year.
“We have to focus on business as well because, ultimately, it is the consumer that is affected by the squeeze on cash and profits,” he said.
The British Retail Consortium said its shop price index, which tracks the cost of basic goods, showed a smaller increase than the overall food inflation rate in February.
“This suggests retailers are successfully managing to limit cost increases for many essential groceries,” its chief executive, Helen Dickinson, said. “Many supermarkets have expanded their value ranges to support individuals and households on lower incomes. Nonetheless, with retailers struggling to absorb these higher costs, shop prices look set to rise in the coming months.”
Walker said costs were rising across the entire supply chain from oil – which affects the price of all food products – to worker shortages, higher transportation costs and soaring electricity bills.
He also pointed to factors including shortages in the supply of fertiliser from Russia, sunflower oil from Ukraine, and a £20m increase in staff pay costs this year as the national minimum wage was raised.
• The cost of living crisis Join Hugh Muir, Richard Partington and Anneliese Dodds MP in a livestreamed event on 14 April. Book tickets at theguardian.com/guardianlive
