Food prices will continue to escalate if the Government fails to address spiralling oil costs, an industry expert has warned.
Geoff Dossetter, external affairs director for the Freight Transport Association, said urgent action was needed to minimise the effects, which would impact on supermarkets and the specialist transport industry. The call came in the same week hauliers took to the streets in anger at rising prices.
"Between 10% and 15% of the cost of items on shelves is probably transport distribution costs," he said. "If you assume a third of truck operational costs is the fuel, and that figure is growing, it will end up at 40 per cent. It will impact on operations, margins and costs."
The high price of oil on the world market was complicated by the UK's high tax regime, Dossetter said.
He called on the government to organise a 25p per litre early rebate for essential vehicle users and scrap plans to add 2p per litre to diesel fuel duty in October.
He added that a new process of taxation, which would separate the fuel duty charged on cars and commercial vehicles, should be developed.
Elsewhere, independent forecourt retailers are also feeling the pinch. Bill Ahearn, managing director of Snax 24, said customers were suspicious of price increases, adding that independents were at a disadvantage because of their thin margins. "The supermarkets are able to buy ahead, which is why they are able to sell at a lower price but that only works in a rising market," he said.
Jonathan James, owner of James Graven and Sons, said haulage customers were tightening their belts. "We deal a lot with lorries and they seem to be making every journey count," he said. "We've seen hauliers paying in cash rather than on cards so we wonder whether companies are shopping around rather than going to their usual suppliers."
He added that spend on luxury items such as chocolates and flowers had also dropped.
A Petrol Retailers Association spokesman said many retailers would be selling fuel at a loss and would only be kept afloat by shop sales.