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Gloucestershire Business News

Revealed: Inflation piles fresh pressure on small retailers

A shocking rise in wholesale fruit and veg prices is pushing small retailers to breaking point.

In the wake of today's unpredicted inflation rise to 10.4%, Chris Hull, who runs Good Food Fruit and Veg in Wotton-under-Edge, has shared cost data with Punchline in a bid to expose the extent smaller shops are being squeezed.

Said Chris: "On today's figures, retailers going up against supermarkets now face their toughest challenge yet. Our wholesale prices for the last six months already show relentless rises in cost across a whole basket of essential fruit and veg items".

Chris, who sources wholesale supplies overnight from Bristol, created an independent outlet five years ago on Wotton's Long Street and has grown his business to employ one full-time staff member and nine more across a shared rota.

In 2019, just ahead of the pandemic, he opened a kitchen and bar, Good Food on the Edge, in the next-door unit and says that only by spreading business options has he been able to negotiate the challenge of Covid and the current inflation crisis.

"Chiller units have helped drive the cost in the fruit and veg shop through the roof. We now pay £2,100 a year for that side of things alone, though we are lucky to have a contract for energy that's still locked in for the kitchen and bar."

It is in data on daily fruit and veg wholesale supplies, however, that the extent of delivering customer value is laid bare.

"For the last six months, we have seen beetroot up 20%, broccoli 110%, red cabbage 120%, carrots 30%, purple sprouting 20%, onions 120%, beef tomatoes 100%, iceberg 120% and cherry tomatoes up 150%."

And topping the charts on runaway price rises, he has seen a 300% rise on Spain-sourced red peppers.

"Red peppers highlight an issue in customer expectation – we see customers come to us for just one, as they are not available nearby in Tesco or the Co-Op. Selling them at £1,  we make a loss, but if shoppers looked at the breadth of what we offer, they will find we can deliver pricing value."

A cocktail of supply chain issues, bad weather patterns, energy costs and the repercussions of Brexit on smooth importation are behind today's challenge, he adds. But opportunism among big supermarkets is also adding to consumer expectation of increased prices.

"Whether it is Spanish salad, English veg or international fruit, the pressure on price is at every turn."

Echoing much of Mr Hull's experience, the Office for National Statistics (ONS) issued a warning this morning on the heels of inflation figures posting at 10.4% – a figure that dramatically wrong-footed City expectations of 9.9%.

And the smoking gun appears to be a sharp increase in the cost of fresh food and non-alcoholic drinks (up 18% over the year). The ONS blames this, and additional factors that include the rising price of restaurant meals and rising prices for women's clothes.

The recent salad crisis, adds the ONS, which resulted in customers scrambling for tomatoes, peppers and cucumbers, was the key factor for food cost rises.

A spokesman said: "The largest upward effect came from vegetables, where prices rose in the month to February 2023 by more than a year earlier. There have been media reports of shortages of salad produce and other vegetables, reportedly because of bad weather in southern Europe and Africa, and the impact of higher electricity prices on produce grown out of season in greenhouses in the UK and northern Europe."

Despite the shaking of confidence in the global banking system from the failure of Silicon Valley Bank in the US and the rescue of Swiss lender Credit Suisse, it is widely predicted that the pressures identified by the ONS will nudge the Bank of England to raise interest rates tomorrow.

Prior to today's figures, inflation fell for three consecutive months , declining from a peak of 11.1% in October to reach 10.1% in January before last month's surprise reverse.

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