Deeside based Iceland ‘working day and night’ to keep prices down but things “will get worse” says MD

The boss of Deeside-based Iceland has said a pint of milk could cost £1 this winter as the price of staple food products continues to surge.

Figures published on Tuesday by the British Retail Consortium showed that food inflation hit a record 11.6 per cent in October sending the cost of tea bags, milk and sugar soaring.

Iceland managing director Richard Walker said the retailer was ‘working day and night’ to keep prices down but things will get worse.

Speaking to the BBC’s Amol Rajan, Walker said: “The price of milk has gone up to 50%, not just in our shops, but all of our competitors.”

He said the price of staple food items has all gone up, “hitting those struggling the most.”

Walker warned food inflation will get worse and that Iceland has held back from passing on some cost increases from suppliers to its customers.

He said: “I’ve got cost prices currently on the table from big branded suppliers that we haven’t stomached yet as a business, let alone have passed on to our customers.”

“It will get worse in the coming into winter, we’ve got heating, we’ve got fuel, we’ve got food inflation, food insecurity is inevitably on the rise and it’s households with kids who are most at risk.”

A pint of milk in Iceland currently costs 89p, asked how long the supermarket chain can keep it under a pound, Walker said:

“We work day and night to keep those prices as low as possible, we operate in a very competitive market so we’re trying to keep those prices down.”

“I don’t know! There’s a lot of external pressures, from the war in Ukraine to commodity price inflation to fuel to labour shortages, to fertiliser shortages and everything else in between.”

He said: “We’re looking as hard as we can to try and keep prices down because our 5m customers a week really depend on it.”

Walker said that some essential items will be sold at a loss, “I think we’ve got a responsibility, we don’t make money on milk, there will be loss leaders that we have to sell because our customers are simply reliant on.

“That’s why we’ve held the price of all about £1 lines and introduced a lot more because people really rely on these to help feed their families.”

"It will get worse… and it's the households with kids who are most at risk"

Iceland boss Richard Walker tells @AmolRajan he is seeing cost prices from big brands which have yet to be passed on to consumers

Full interview: https://t.co/dTWvW87uY5 pic.twitter.com/M57rdfxEXJ

— BBC Radio 4 Today (@BBCr4today) November 2, 2022

Helen Dickinson, Chief Executive of the British Retail Consortium, said: “It has been a difficult month for consumers who not only faced an increase in their energy bills, but also a more expensive shopping basket.”

“Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market.”

“Even the price of basic items went up, with the price of the humble cuppa rising, as tea bags, milk and sugar all saw significant rises.”

Helen Dickinson said: “While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike.”

“With Christmas fast approaching, customers are looking for any sign of respite, but it is increasingly difficult for retailers to shoulder the ongoing supply chain pressures.”

“The (UK) Government can support households by reducing the cost burden that prevents retailers from keeping prices down for their customers.”

“Government must freeze business rates to prevent an additional £800m bill landing on the plates of retailers and in turn their customers in 2023.”

It’s vital that households get support as food inflation soars, consumer group Which?? has said.

Sue Davies, Which? Head of Food Policy, said:

“Soaring food prices are a real concern and our research shows millions of consumers are already skipping meals or struggling to put healthy meals on the table due to the cost of living crisis.”

“It is vital that households get the support they need from the government and businesses.”

“Supermarkets have a crucial role to play in helping their customers navigate the tough months ahead.”

“Budget lines for healthy and affordable essential items need to be widely available across their stores and they should ensure shoppers can easily compare the price of products to get the best value.”

“Promotions should be targeted at supporting those most in need.”