Millions of families are facing a 'perfect storm' of empty supermarket shelves and an imminent hike in the cost of living of around £1,500 a year, it emerged today.
A shortage of toys ahead of Christmas and soaring costs of used cars - to the extent that some are now more expensive than new models - is also contributing to what is set to be a difficult end to the year for many households.
Brexit, increased gas prices and the Covid pandemic have all contributed to the crisis, which will leave families substantially out of pocket over the coming months.
A lack of lorry drivers in recent weeks, along with the effects of the 'pingdemic' earlier in the year, has seen many shelves left bare, but now the food supply chain is up against a new challenge, after rising gas prices forced much of the country's commercial production of carbon dioxide to shut down.
The industry describes the gas as being fundamental to producing and transporting supermarket staples like bread and meat, as well as beer and fizzy drinks.
How vegetables have increased in price over the last year
Leeks, latest price £1.26 per kg: same week 2020, £1.23
Turnips, latest price £1.83 per kg: same week 2020, £1.53
Round tomatoes, latest price £1.47 per kg: same week 2020, £0.75
Brown bulb onion, latest price £0.53 per kg: same week 2020. £0.43
Beetroot, latest price £0.55 per kg: same week 2020, £0.48
Source: BBC
Some fear businesses have less than two weeks before their stocks of CO2 begin to run out, with one boss describing the crisis as a 'black swan type of event', adding that ministers and supermarket giants were only now appreciating the knock-on effects on agriculture and production.
Crisis talks between Business Secretary Kwasi Kwarteng, gas producers, suppliers and regulator Ofgem are being held today to discuss the extent of the impact of the surging prices.
Meanwhile, the Government is being urged by meat producers to step in to protect the food supply chain, after the sharp rise in gas prices resulted in a cut in the supply of carbon dioxide (CO2) to the industry.
The price of food and drink is already up on last year, amid fears the supply chain issues - which result in suppliers taking on greater costs - may see customers having to pay out even more.
The lack of supply in many sectors comes against a backdrop of rising bills for millions of families, many of whom will still be feeling the brutal effects of the pandemic on the economy.
Experts warn today that household costs could collectively soar by more than £125 a month, putting Britons on the cusp of the biggest spending squeeze in nearly a decade.
Money experts said a 'perfect storm' of price and tax hikes could push family finances to the limit across the country.
Britain is facing up to a bleak end to the year, with a fresh threat of food shortages coming amid an imminent hike in the cost of living
A lack of lorry drivers in recent weeks, along with the effects of the 'pingdemic' in previous months, has seen many supermarket shelves left bare
Now the food supply chain is up against a new challenge, after soaring gas prices forced much of the country's commercial production of carbon dioxide to shut down
How gas price hikes and carbon dioxide shortages could lead to more empty shelves
Two of England's biggest fertiliser plants in Teeside and Cheshire - which use the gas to produce ammonium nitrate, which is then used by farmers for their crops - have shut down, leaving bosses concerned over the potential consequences for family essentials.
Nick Allen, chief executive of the British Meat Processing Association, told the Times: 'This could be the straw that broke the camel's back.
'It is potentially a massive challenge for the food industry when we are already facing huge issues.'
Speaking to the BBC Radio 4 Today programme, he added: 'If we haven't got the CO2 supplies, on the packaging side that reduces the shelf-life of products going on the shelves at a time when we are really struggling because of all the transport problems.
'This has come as a huge shock, it has happened so quickly. I think everyone is outraged in the industry that these fertiliser plants can shut down without any warning whatsoever and suddenly take something which is so essential to the food supply chain off-stream just like that.
'We really need Government to step in now and actually do something.'
Ed Miliband, Labour's shadow business secretary, added: 'A basic duty of Government is to ensure secure, affordable energy supplies for businesses and families.
'It is a fundamental failure of long-term Government planning over the last decade that we are so exposed and vulnerable as a country and it is businesses and consumers that are paying the price.
'If we had been investing at sufficient scale in diverse, secure, zero carbon energy supplies and making energy efficiency a much bigger priority, we would not be in such a precarious position.
'Ministers must recognise the severity of the cost of living crisis now facing families as a result of rising energy prices and their unfair tax rise and cancel the cut to Universal Credit.
'They must also ensure security of supply and take the long-term action to put in place a much more robust, resilient and diverse energy infrastructure.'
Two of England's biggest fertiliser plants - which use carbon dioxide to produce ammonium nitrate, which is then used by farmers for their crops - have shut down, leaving bosses concerned over the potential consequences for family essentials
Russia's state-owned energy firm, Gazprom, is now facing an investigation into the rise in price. Lawmakers said they were suspicious of the company's 'effort to pressure' Europe to agree a fast launch to its Nord Stream 2 gas pipeline (pictured)
Meanwhile, Business Secretary Kwasi Kwarteng will talk with chief executives from gas producers, suppliers and regulator Ofgem today to discuss the extent of the impact of the surging prices.
He tweeted this morning: 'Today I'll be speaking to chief executives of the UK's largest energy suppliers + operators to discuss the global gas situation.
'Britain has a diverse range of gas supply sources, with sufficient capacity to more than meet demand. We do not expect supply emergencies this winter.
'Energy security is an absolute priority. We are working closely with @ofgem and gas operators to monitor supply and demand.'
It is understood Mr Kwarteng has meetings today with senior executives from Ofgem, Centrica, National Grid, Energy UK, Octopus, Ovo, SSE, EDF, ScottishPower, Shell Energy, E.ON, Bulb and SGN.
Government sources have reportedly told the BBC there is no threat to the UK's gas supplies, but potential impacts on small energy companies most at risk of exposure are being monitored.
A Government spokesperson told the broadcaster: 'The UK benefits from having access to highly diverse sources of gas supply to ensure households, businesses and heavy industry get the energy they need at a fair price.
'We are monitoring this situation closely and are in regular contact with the food and farming organisations and industry, to help them manage the current situation.'
It comes after Russia was last night accused of rigging the prices of gas to damage Britain's economic recovery from Covid.
The country's state-owned energy firm, Gazprom, is now facing an investigation into the rise in price.
And more than 40 MEPs last night signed a letter to the company in which they accused it of 'deliberate market manipulation'.
A group of European Parliament lawmakers has asked the European Commission to investigate Gazprom's role in soaring European gas prices, saying the company's behaviour had made them suspect market manipulation.
Gas prices in Europe have surged in recent months, helping to drive European electricity costs to multi-year highs.
Electricity prices in the UK skyrocketed to 11 times above normal levels on Monday.
In a letter to the EU's executive Commission around 40 of the Parliament's 700 lawmakers said they suspected Russia's Gazprom had acted to push up gas prices.
'We call on the European Commission to urgently open an investigation into possible deliberate market manipulation by Gazprom and potential violation of EU competition rules,' said the letter.
In response to the accusations, Gazprom said it supplied its customers with gas in full compliance with existing contracts.
Families are now on the cusp of the biggest spending squeeze in nearly a decade as bills and prices rise relentlessly
The perfect storm that sent prices spiralling
A combination of events has caused wholesale gas and power prices to spike, meaning household energy bills are set to soar:
- A fire earlier this week shut down a key cable that brings power into Britain from France. The IFA interconnector in Kent can transmit enough electricity for two million homes – but it will not be at full capacity until next March.
- A long winter meant European countries built lower gas stocks than usual over the summer. Russia has also been providing less gas to Europe, which many believe is a way to pressure leaders into switching to a controversial pipeline, Nord Stream 2.
- The UK has very little gas storage capacity, which leaves it at the mercy of imports.
- The price of tankers bringing in the liquefied form of natural gas has surged as Asian economies have recovered, and shipping delays have compounded this further. A lack of wind recently means that less renewable power has been generated. Coal power plants are now having to be fired up so Britain can keep the lights on.
Rising household bills could leave millions of families out of pocket
Energy prices have rocketed this week, leading to suppliers pulling deals and predictions that average households could soon face paying over £400 extra a year on power bills.
A year ago, the best one-year fixed deal on comparison website Energy Helpline was £855 – but last night the cheapest available was more than double that at £1,895.
Analysts Baringa project that some 39 suppliers could collapse in the next 12 months, leaving just 10 firms dominating the market.
To help those companies deal with surging costs, regulator Ofgem will raise its price cap again, according to the Times, meaning 15 million customers on variable tariffs face paying hundreds of pounds more.
Dermot Nolan, a former Ofgem chief executive, said the increases were the result of depleted stocks following a cold winter last winter, reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.
He told the BBC Radio 4 Today programme: 'It is not obvious to me what can be done in the very short run. Britain does have secure relatively diverse sources of gas, so I think the lights will stay on.
'But I am afraid it is likely in my view that high gas and high electricity prices will be sustained for the next three to four months.
'It is very difficult to see what the Government can do directly in this regard.'
Elsewhere, petrol prices have also blown up, with the cost of filling a 50-litre tank rising from £56.55 to £67.30 since August last year.
The price of food and drink in shops and supermarkets rose by 1.1 per cent in August – the highest rate since 2008 – as retailers battled supply shortages and higher costs.
Train fares, telephone and internet bills, and other day-to-day expenses are also increasing, while Boris Johnson's health and social care levy means workers will have to pay an extra 1.25 percentage point in tax from next year.
There are also fears of hefty council tax rises – and there could be more bad news in Chancellor Rishi Sunak's Budget next month.
A long winter meant European countries built lower gas stocks than usual over the summer. Russia has also been providing less gas to Europe, which many believe is a way to pressure leaders into switching to a controversial pipeline, Nord Stream 2
Insurance experts warned that premiums will rise in January when firms are banned from reserving their best deals for new customers.
Inflation jumped from 2 per cent in July to 3.2 per cent last month in the biggest spike since 1997.
The figures, compiled for the Daily Mail by Hargreaves Lansdown, show it could all add up to cost average families an extra £132 a month – or £1,584 a year – in what will be the biggest rise in household spending costs since 2012.
Sarah Coles, a personal finance analyst at the investment company, said: 'This is a squeeze on spending at a time when many people's financial resilience has taken a beating as a result of the pandemic.'
Energy firms have this week pulled nearly all fixed deals from sale on price comparison sites as wholesale gas prices hit record highs. And some believe the power price surge means some suppliers will not survive the winter.
Jane Lucy, of the auto-switching site Labrador, said: 'It is not unrealistic to think that at least half a dozen firms could collapse this winter.'
Energy regulator Ofgem's price cap protects around 15million households on standard variable tariffs. The cap has already risen by £139 to stop average standard variable tariff bills going above £1,277 – but experts said the wholesale price rises mean the cap may have to be raised a further £280 in the new year.
Myron Jobson, personal finance campaigner at Interactive Investor, says: 'Consumers face a bleak reality of higher utility bills in the winter months. It will cost more to power the washing machine and even take a hot shower this winter.'
Laura Suter, of investment firm AJ Bell, said: 'These increases will have a big impact on many families who were just about managing before.'
Families are warned to shop for festive gifts early amid fears of a toy shortage
It may still be summer, but families were warned last night to buy toys for Christmas now to avoid tears under the tree (stock image)
It may still be summer, but families were warned this week to buy toys for Christmas now to avoid tears under the tree.
The Covid-related disruption to global shipping that has left supermarkets without some product lines also threatens to affect deliveries of toys from China, where most are made.
Perhaps to get parents in the mood for an early spree, grocers are selling mince pies – more than three months before Christmas.
Toys expected to be a hit this year include Lego sets, including its Elf Club House, at £84.99. Lego is also selling Advent calendars featuring Star Wars and Marvel characters.
Batman vs Superman Scalextric cars for £39.99 are also likely to be popular, as well as the Ravensburger Planetary Solar System 3D jigsaw puzzle, at £39.99, and soft toys such as the Hoppie Rabbit with Audio Play, at £29.99. The warning about the need to stock up comes from NPD, a business analytics firm.
Frédérique Tutt, its global toy industry expert, said: 'Shortages are a big concern for most makers. With anticipated supply chain shortages and resultant price increases on the cards, people need to shop early.
'Retailers and brands are trying to bring their stock shipments forward, but are expecting shortages to hit well before Christmas.'
In addition to shipping issues, the UK is said to be short of 90,000 HGV drivers, triggering fears that gaps on shelves will get worse.
However, the early crop of mince pies might cheer up some shoppers – even if it does infuriate traditionalists.
The Central England Co-op, which has shops across the middle of the country from West Yorkshire to East Anglia, said it had begun selling mince pies after customers asked when they'd become available.
It said: 'They also want to stock up ahead of any potential food shortages.'
Packs of mince pies have also been spotted at some Asda and Iceland outlets.
Natalie Smith, of Central England Co-op, said: 'For months, colleagues have been inundated with requests for when Christmas products will be on sale, especially mince pies.
'While we know that hearing about anything festive related this early is not for everyone, for some they cannot wait.'
Used cars are worth MORE than new models
Analysis found a second-hand Dacia Sandero was typically being advertised for £12,398, significantly higher than its average new price of £10,172.92
The average second-hand car is increasing in value by 20% within the first six months of being sold, shocking figures have revealed.
While cars are notorious for depreciating in value - usually by five per cent after leaving the forecourt - an unprecedented demand for used vehicles coupled with a chronic supply shortage for new cars has reversed the age-old trend.
Experts have described the anomaly as a 'once-in-a-generation development'.
It comes as commuters who moved further out of the cities due to the Covid-19 pandemic are now in need of a car to get to work, while white-collar workers who saved more than expected and are looking to splash the cash.
This has been paired with a global shortage of semiconductor microchips, which are essential for the operating systems of all vehicles, making new cars difficult to manufacture, hence causing an unprecedented demand for used vehicles.
An investigation by The Times found the price of some cars rose by almost £10,000 in the space of five months and continued to increase.
'What we are seeing here is absolutely unprecedented — a once-in-a-generation development that is turning the rules of car valuations on its head,' Derren Martin, head of valuations for Cap HPI, a vehicle valuation service, said.
'Second-hand cars are appreciating, rather than depreciating, in value.'
The semiconductor microchips needed to make new cars have been in short supply due to Covid-related closures in factories from Turkey to China.
The same chips are also used in PlayStation and Xbox gaming consoles, which have been bought in record numbers for children confined to their homes during global lockdowns, only adding to the supply shortage.
Britain's Society of Motor Manufacturers and Traders has cut its forecast for new car registrations for 2021 by 24 per cent, from 2.4 million to 1.8 million.
Last month, it reported the worst July for UK automotive production since 1956.
A Toyota Yaris GR, meanwhile, was being advertised at £35,967 compared with its new price of £30,963.33
It comes as a study by Cap HPI showed how 52 six-month-old vehicles with 5,000 miles on the clock gained in value significantly compared with when they were brand new.
The analysis found a second-hand Dacia Sandero was typically being advertised for £12,398, significantly higher than its average new price of £10,172.92.
A Toyota Yaris GR, meanwhile, was being advertised at £35,967 compared with its new price of £30,963.33.
According to the Times, Renault in Wolverhampton is advertising a Dacia Sandero 1.0 Comfort, manufactured this year and with 159 miles on the clock, for £13,450 — more than £2,000 above its new price.
Elsewhere a Toyota Yaris Hybrid 1.5, manufactured this year with 3,040 miles on the clock, is listed at Stephen Eagell Toyota in Milton Keynes for £23,225. Its original cost as new is £21,740.
Car magazine Parkers reported some second-hand cars gaining almost £10,000 in value within five months of being sold.
It looked at three-year-old cars that had 40,000 miles on the clock and compared their forecourt prices today with their value on February 1.
The analysis showed that a second-hand Toyota Auris hybrid had risen, on average, from £9,895 to £14,095 - or by 45 per cent.
Meanwhile a Mazda MX5s soared from £13,395 to £18,995, representing a 41.8 per cent jump.
The cost of a monthly finance plan, however, which sees drivers pay for the car in instalments, has remained stable, as they are calculated by projected values in four years' time - although experts believe that a correction could come before then.
Russ Mould, investment director at AJ Bell, the wealth manager, said: 'Ultimately the best cure for high prices is high prices. Eventually they will reach a level where buyers decide there isn't enough value on offer for them to justify a purchase.'
Shops suffering tie shortage due to WFH and a lack of weddings
Britain is also facing a TIE shortage - after shops let stocks dwindle during lockdown and are now struggling to fill demand.
Stores across the UK are running low on ties - after a long period of working from home and less weddings to attend.
Demand for them dropped sharply but have now risen again as people emerge from lockdown - but supplies are low and the situation has been made worse by global delivery issues.
John Lewis stores in London and Cambridge were found to be low on stock, as well as the Plymouth H&M branch.
Some shoppers online are also reporting low levels in store at M&S and Next.
The situation was first raised by BBC Radio Five Live host Nicky Campbell with others on twitter reporting the same problem.
Campbell told listeners he tried to buy a tie at John Lewis' Oxford Street branch, but was shocked to find none in stock.
Responding in a statement to Nicky on Five Live, a spokesman for John Lewis said stock levels are still behind.
They said: 'We've seen a huge spike in sales recently as weddings restart and some people head back to the office, which has affected stock levels.
'Given that sales were so low in the heat of the pandemic. We're looking to get more stock in a soon as possible.'
A H&M spokesperson said they are unable to comment on sales.
They said: 'Our stock levels do vary across stores, however we do have a range of ties available at hm.com which our customers can purchase from if their local branch is sold out.'
A John Lewis statement said: 'Ties have been really popular with our customers recently and as always, our focus is on maintaining the best possible range of products for our customers.'
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