Shoppers should expect higher bills caused by a national shortage of lorry drivers and workers.
Coca Cola, Ikea, McDonalds and Wetherspoons are among the companies dealing with supply shortages. This could cause prices to rise for many shoppers.
How have companies been affected?
In recent weeks a long list of companies have announced supply issues thanks to staff and product shortages, including:
- Ikea struggling to supply about 1,000 product lines in the UK
- Some Wetherspoons pubs running out of beer
- Haribo struggling to deliver products to the UK
- Iceland cancelling 30-40 deliveries a day
- The National Pig Association warned that there was a backlog of 85,000 pigs on farms
- Flu jabs in England and Wales delayed
James Bielby, chief executive of the Federation of Wholesale Distributors, told the BBC of “chronic” staff shortages in the food and drink supply chain, with up to 500,000 vacancies.
“That means all businesses – growers, processers, wholesalers and manufacturers – having to offer incentives to retain and recruit staff, and costs are rising as a result,” he added.
“Under these circumstances, it is inevitable that some of these cost increases will be passed through the supply chain, which will lead to food price inflation.”
What is causing a shortage of lorry drivers?
Rising demand as the economy opens after lockdown, tax changes, and Brexit have all combined to lead to a shortage in lorry drivers.
Worker shortages have come about because of Brexit and changes made to the visa system. This has made it harder for businesses to bring in labour from the European Union.
Global supply chain shortages have grown as Western economies reopen. As the worst effects of the coronavirus pandemic subside consumer demand for goods and services is rising.
Industry bodies estimate a shortfall of 100,000 truck drivers in the UK. To keep up with the high demand, truck drivers’ salaries have increased significantly in a short period of time.
What impact does it have on your finances?
Businesses ranging from food and drink to flu vaccination providers have been suffering from supply issues. This means consumer prices could rise to meet the demand.
Inflation is currently at 2.1% as of July 2021.
The biggest upward contribution to that was caused by transportation. Inflation is expected to rise to around 5% by the end of the year, according to The Bank of England.
While the information from the ONS still does not account for shortages of goods, it is likely if such supply issues continue that it will soon begin to reflect in its data.
What can you do about it?
Although it’s hard to avoid, there are things you can do to reduce the effect of inflation on you and your family:
- Try buying second hand. Read Jane’s story on how she only bought second-hand for a year to save money as inspiration.
- Buy and cook in bulk to cut costs
- Look at the reduced price sections in shops
- If you’re saving for the future, start investing in stocks to beat inflation, using tax-efficient accounts such as ISAs or pensions