High inflation could last for years, warns Primark chief
BRITAIN faces a 1970s-style “inflation spiral” due to the war in Ukraine and China’s Covid battle disrupting supply chains, firms have been warned.
Associated British Foods, the owner of Primark, made the dire forecast, claiming the problem could continue for years.
Chief executive George Weston said that ABF, whose businesses include Silver Spoon sugar, Ryvita and the Twinings tea brand, has raised its prices to off-set higher energy, staff, commodities and transportation costs.
However, price hikes at Primark will not come into effect until it has launched its autumn/winter range later this year.
Mr Weston said that Russia’s invasion of Ukraine has disrupted food supplies, while new lockdowns in China have added to the strain on supply chains.
He said this will make things worse for businesses, which are already struggling with higher costs.
As a result, he warned inflation could be a problem that lasts for years.
Mr Weston said: “With supply chains disrupted by the war in Ukraine and Covid-19 in China, we could have high inflation until they’ve cleared. We could be heading back to the 1970s, with inflation spiralling.”
Mr Weston added that aside from halting food and commodity supplies from Ukraine, the Russian invasion could drive up the cost of other foods and reduce the availability of some items.
As an example, he explained that although sugar prices are spiking, farmers in the UK could opt to meet the shortage in sunflower oil by growing the flowers instead.
That would push up the price and could reduce production of beets for sugar. He said: “I have no doubt that we’ll be paying more for sugar beet in a year’s time.”
At its half year results, ABF said that group sales and operating profits had returned to pre-pandemic levels. Revenues for the six months to March 5 climbed 25 per cent to £7.9billion, while its pre-tax profits surged 131 per cent to £635million.
ABF put its improvement down to a strong recovery at Primark, which benefited from the reopening of its stores.