Inflation

Suppliers are expected to make a flood of cost price increase requests later this year after being widely snubbed by retailers in attempts to get price increases through so far in 2025, an exclusive survey for The Grocer has revealed.

The poll of more than 50 food and drink suppliers, across the full range of supermarket products, shows that more than 90% of suppliers have looked to pass on increased costs due to inflation so far this year.

However, less than a quarter of those suppliers said they had recovered all the costs they requested, found the survey. It was carried out by The Retail Mind across food sectors including grocery, BWS, frozen, chilled and dairy.

A whopping 65% of the suppliers, which included medium to large food suppliers, said they were now expecting to have to pass on more costs later in the financial year.

The suppliers reported soaring costs from extra National Insurance contributions, cited by nearly 90% of those who responded, along with increases in wages and costs related to the introduction of the government’s new packaging tax, EPR, which was cited by more than half of suppliers.

Ingredient cost hikes (73%), energy (50%) and transport (50%) were also key drivers.

There have been rising fears over a new flood of CPI requests, with the BRC last week warning of a new ”surge” of inflation in the autumn.

Food prices rose 2.8% in May, marking the fourth consecutive month of rising prices and the highest level since May last year, according to the consortium and its survey partner NIQ.

Asda boss Allan Leighton last week warned suppliers it would refuse to countenance a flood of CPI requests from its suppliers.

“We have to question when suppliers come in with floods of requests for price increases,” he told The Grocer. “We’re the gatekeeper for those prices and we are managing to do that.

“You can’t say you stand up for customers and then not do that because CPIs are coming through.”

However, Retail Mind founder Ged Futter said he believed retailers were storing up trouble – and threatening to damage investment from suppliers – by batting away “legitimate” cost increases. However he said the situation was a stark contrast to the cost of living crisis, which saw inflation hit nearly 20% in the spring of 2023.

“For me one of the big things this survey shows is we are in a different place to 2022/23,” said Futter.

“Back then we had inflation peaking at 20%. Now is a more normal number between 1% and 10%.

“Most people are between 1% and 6%, and when you have that lower number it’s harder to get that inflation through because retailers are knocking it back.

“That’s what we are seeing, but all that is going to do is put more pressure on an already squeezed supply chain, so they will have to go back again asking for more price rises later in the year.

Futter added: “When you have the battle of cost price increases all it means is suppliers are under the upmost of pressure, they are missing their number and can’t invest.

“As a supplier if you can’t invest all you do is pull back. I certainly feel like I’m hearing that already.”

There was further bad news for Asda, alongside the prospect of unwanted CPI requests in the survey.

Just 4% said they believed Asda’s Rollback strategy was working, although 65% of suppliers said they believed they were in the thick of a price war.