Shoppers face ‘five per cent hike in food prices’ due to perfect storm of lorry driver and gas shortages, warns Tesco boss who says ‘so much effort is going into averting a horrendous crisis at Christmas’

• Tesco chairman John Allan has warned customers could see a rise in food costs 
• The Tesco boss described a perfect storm of issues hitting the food industry 
• Severe lorry driver shortages and gas shortages amid rising costs have hit firms

Shoppers are facing a five per cent hike in food prices amid lorry driver and gas shortages, the boss of Tesco has warned. 

Speaking to ITV’s Robert Peston last night, the supermarket’s chairman John Allan warned of a perfect storm of issues and said efforts were being made to avert a ‘horrendous crisis at Christmas’. 

He said: ‘I think it’s almost impossible to forecast, but I mean I think we’re probably looking at, for food overall, you know, mid-single digit increases which is much higher than we’ve had in recent years.

‘I think certainly while we get through this particular set of issues that we’re contending with, which include shortage of labour in a number of important areas of food manufacturing, shortage of HGV drivers, which can be fixed, and we’re all working very hard to fix.’

Nationally, food supply chains have been placed under intense stress because of a shortage of around 100,000 HGV drivers – with empty shelves across most UK supermarkets as a result.

They were further damaged after two plants that produce 60 per cent of the UK’s CO2 were shut down amid rising gas prices. 

CO2 is used for everything from the humane slaughter of chickens and pigs, to putting the fizz in soft drinks and creating packaging that keeps foods fresh.  

There are fears that the perfect storm could lead to several shortages in the run-up to Christmas. 

The classic Christmas dinner could be decimated, with turkey, pigs in blankets, vegetables like potatoes and brussel sprouts all at risk. 

Toys, vinyl and books could also experience shortage – as well as Christmas trees.  

Tesco chairman John Allan admitted that food prices could rise in the run-up to Christmas

Empty shelves are seen in the meat aisle of a Co-Op supermarket branch in Harpenden

Shelves in a supermarket look sparse yesterday as supply chain issues continue in Northwitch

Despite the government agreeing a deal to restart production at the plants, industry bodies have warned that consumers may still see a hike in food prices, particularly if the cost of CO2 rises. 

The government’s deal with CF Industries is only in place for three weeks – leading to fears that the issues could start up again in the run-up to the festive period.  

However, Tesco boss Mr Allan insisted there was no need to panic buy and that Christmas would not be ‘terrible’.   

He said: ‘I don’t think the end result will be a horrendous crisis at Christmas. I would hate for people to get the impression that we are going to have a terrible Christmas and they’ve got to go out and panic buy.’

Yesterday, Tesco revealed it was currently suffering a shortfall of approximately 800 HGV drivers as it urged the Government to ease restrictions on foreign workers to help alleviate the supply chain crisis.

Despite being the UK’s largest supermarket chain, and offering new employees a £1,000 bonus since July, Andrew Woolfenden, Tesco’s distribution and fulfilment director, warned they were still unable to make up the lost numbers. 

Slamming the problem as ‘industry-wide’, Mr Woolfenden compared companies desperately trying to recruit from a limited pool of expert drivers to ‘moving deckchairs around’.

He warned ITV News: ‘Our concern is that the pictures of empty shelves will get ten times worse by Christmas and then we’ll get panic-buying.’

Despite gaps appearing on supermarket shelves across the country this summer, consumers are yet to see a return of full-scale panic buying that was endured at the start of the pandemic.

But concerns are continuing to grow should demand suddenly surge again – with replenishing empty shelves already an issue for most major UK retailers.

Trade association Logistics UK has called on ministers to provide up to 10,000 temporary work visas for trained EU drivers to paper over the cracks.

The Government has so far rejected these calls, instead insisting firms recruit from a pool of British workers.

It comes as shorter, fast-track HGV tests have been mooted as a potential solution to help plug the spiralling vacancies in the haulier industry.

Meat manufacturers have warned that shoppers are likely to face higher prices as a result of the surge in CO2 costs

Industry experts say better pay and improved working conditions are needed to help improve staffing levels – and put the shortage largely down to Brexit and the pandemic, which led to 14,000 European drivers going home and just 600 of those returning.

The Road Haulage Association said the total number of people in the UK with HGV licences this summer is 516,000. But the latest Department for Transport data shows 278,700 HGV drivers were employed in 2020, equivalent to 54 per cent of the total.

The crisis, which has also been made worse by Covid-related delays to testing new drivers, has seen supermarket shelves across the country go empty as companies struggle to restock their products. 

But Tesco’s chief Mr Woolfenden issued the stark warning that consumers could see even more barren shelves by December – alongside a return of panic buying.

A spokesperson for the supermarket said: ‘We have good availability, with deliveries arriving at our stores and distribution centres across the UK every day.

‘While the industry-wide shortage of HGV drivers has led to some distribution challenges, we’re working hard to address these and to plan for the months ahead, so that customers can get everything they need.’

Exacerbating the issue is a roaring debate over limited nationwide supplies of CO2, commonly used in the food and drink industry, and how the Government plans to ensure families don’t have to choose between ‘heating’ and ‘eating’ this Christmas.

Prime Minister Boris Johnson triumphantly declared yesterday that ‘Christmas is on’, after the Government struck a short-term, taxpayer-funded deal with CO2 producers to avert food shortages.

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