Yahoo Finance Morrisons warns lorry driver shortage will push up prices
Food prices are expected to rise due to the impact of the lorry driver shortage, supermarket chain Morrisons has warned.
The company, which is currently at the centre of a bidding battle between two US private equity firms said: “We expect some industry-wide retail price inflation during the second half [of the year], driven by sustained recent commodity price increases and freight inflation, and the current shortage of heavy goods vehicle (HGV) drivers.
“We will seek to mitigate these and other potential cost increases, such as any incurred to maintain good on-shelf availability.”
The shortage of HGV drivers, worldwide price rises, and higher costs for commercial transport are all likely to push up the price of a customer’s daily shop.
The supermarket chain’s chief executive David Potts said: “Pet food has been quite short, as well as fizzy drinks, bottled water, crisps and some wines.”
And the warnings were echoed by other business leaders who are expecting an autumn rise in living costs.
Darren Labbett, the managing director of Woods Foodservice, a wholesaler that supplies pubs and restaurants, said last week that a “perfect storm” would force business to raise prices.
“We, as well as the rest of the supply chain, can’t absorb those price increases forever. Vegetable oil is at its highest price now for over 30 years,” he said.
Consumer goods giants, Nestle, Procter and Gamble, and Unilever have warned that they will be forced to hike their prices too.
James Bielby, the chief executive of the Federation of Wholesale Distributors, said: “Across the whole supply chain there are 500,000 vacancies currently. There is genuine wage inflation, which will lead to food price inflation.
“The labour shortage means you are having to pay drivers specifically more, and that will be passed on.”
Morrisons’s comments came as the supermarket chain reported a 43 per cent fall in pre-tax profits to £82m for the six months up to August 1, down from £145m a year ago.
Their underlying profits, which exclude anything Morrisons thinks was a one-off impact on earnings, also fell 37 per cent to £105m.
The group blamed the crash on the pandemic and said they lost £80m in profit from cafes, petrol stations and food-to-go.
The supermarket has received offers from buyout firms Clayton, Dubilier and Rice (CD&R), and Fortress, but confirmed that it was recommending CD&R’s offer of 285p per share, valuing the group at £7bn.
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