Asda and Morrisons imposing purchase limits on some fruits and vegetables due to supply challenges
Asda and Morrisons are imposing limits on some of the fruit and vegetables customers can buy due to supply shortages.
Asda is temporarily limiting the purchase of tomatoes, peppers, cucumbers, lettuce, salad bags, broccoli, cauliflower and raspberries to three of each item per customer.
“Like other supermarkets, we are experiencing sourcing challenges on some products that are grown in southern Spain and North Africa,” an Asda spokesman said.
“We have introduced a temporary limit of three of each product on a very small number of fruit and vegetable lines, so customers can pick up the products they are looking for.”
Morrisons said it would introduce a limit of two items per customer across tomatoes, cucumbers, lettuce and peppers from Wednesday.
The move follows a warning from the National Farmers’ Union that a range of British vegetables risk being rationed as farmers struggle with high energy costs.
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Production of some fruits and vegetables grown in British heated and covered buildings – such as cucumbers and tomatoes – was already falling, the NFU president said.
“I think there are going to be challenges on availability of some food items,” said Minette Batters, including other salad vegetables grown indoors.
Vegetables grown in fields – such as cauliflowers, potatoes and purple sprouted broccoli may also be impacted, she said.
Weather in southern Europe and northern Africa had disrupted crops including tomatoes and peppers, the retail businesses trade association said.
The British Retail Consortium said Britain typically imports 95% of its tomatoes and 90% of lettuces from December to March.
Growers in Morocco have struggled with cold weather, heavy rain and floods. The problem continued down the supply chain as suppliers were hit by ferry cancellations, affecting lorry transport.
Spanish crops have also been affected by bad weather in the past three to four weeks.
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Other British supermarkets are understood to be considering limits similar to Asda.
A government energy support scheme was established for energy intensive industries but horticulture was not covered. Sectors such as steel fall under the remit of the scheme.
The Bank of England has forecast Rachel Reeves’s first budget as chancellor will increase inflation by up to half a percentage point over the next two years, contributing to a slower decline in interest rates than previously thought.
Announcing a widely anticipated 0.25 percentage point cut in the base rate to 4.75%, the Bank’s Monetary Policy Committee (MPC) forecast that inflation will return “sustainably” to its target of 2% in the first half of 2027, a year later than at its last meeting.
“Since the MPC’s previous meeting, the market-implied path for the Bank rate in the United Kingdom has shifted up materially,” the MPC said in its minutes.
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The Bank’s quarterly Monetary Policy Report found Ms Reeves’s £70bn package of tax and borrowing measures will place upward pressure on prices, as well as delivering a three-quarter point increase to GDP next year.
Governor Andrew Bailey stressed however that the underlying trend was “continued progress in disinflation”.
The MPC, whose members voted 8-1 in favour of the cut, with the single opponent favouring a hold at 5%, maintained its view that rates will need to fall “gradually” as it monitors the economic response to falling inflation.
“Inflation is just below our 2% target and we have been able to cut interest rates again today,” said Mr Bailey.
“We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much. But if the economy evolves as we expect it’s likely that interest rates will continue to fall gradually from here.”
Why will inflation rise?
The Bank forecasts that the upward pressure on prices will begin in the first half of next year, with the addition of VAT to private school fees and the £1 increase in the bus fare cap to £3.
The increase in employer national insurance to 15%, the largest single measure in the budget, is “assumed to have a small upward impact on inflation,” offset by the freeze in fuel duty rates.
Together these will push inflation up by 0.3 percentage points next year, with the near-half point peak coming in 2026 only after the removal of the fuel duty-freeze, a measure the Bank is compelled to assume will happen, despite successive chancellors, including Ms Reeves, maintaining it for 11 years.
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The Bank found that the national insurance increase and the uprating in the national living wage “is likely to increase the overall costs of employment”, and will be passed on by employers through a mix of higher prices, marginal costs and wages, but the balance between those is not yet clear.
“The combined effects of the measures announced in the autumn Budget 2024 are provisionally expected to boost the level of GDP by around three-quarter per cent at their peak in a year’s time, relative to the August projections,” the minutes read.
“The budget is provisionally expected to boost CPI inflation by just under half of a percentage point at the peak, reflecting both the indirect effects of the smaller margin of excess supply and direct impacts from the budget measures.”
The battle for control of Thames Water’s future has deepened after a second group of bondholders tabled a fully underwritten offer to provide £3bn of new debt.
Sky News has learnt that the utility’s class B bondholders submitted a proposal to the company on Thursday morning which aims to trump a rival offer from its class A creditors.
The submission of the class B group’s legally binding agreement sets up a tussle between some of the world’s largest pension funds, hedge funds and insurers for a key role in determining the fate of Britain’s biggest water company.
Thames Water, which has about 16 million customers, is scrambling to avert the threat of insolvency and temporary nationalisation as it seeks a compromise from Ofwat, the industry regulator, over its spending plans for the next five years.
The company’s shareholders have already abandoned plans to inject billions of pounds into it, describing it as uninvestible.
The tabling of the latest proposal will put pressure on Thames to reconsider its public support for a more expensive deal with the class A group, which includes the likes of Silverpoint and Elliott Advisors, the American hedge funds.
One of the members of the class B group said its plan provided Thames Water with “a deliverable and binding offer to address the company’s immediate funding needs”.
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Amid a dispute with the class A debtholders about the relative cost to Thames Water of their proposals, the source said the class B financing would provide “twice the capital at a far lower cost and on more flexible terms”.
They added that it was open to all Class A and Class B holders.
It was unclear whether Thames Water would be able to engage on the class B proposal under the terms of the deal the company has already endorsed with the class A group.
The class B plan has been assembled and financed in less than a fortnight by DC Advisory, the investment bank, and law firms Quinn Emmanuel Urquhart & Sullivan and Sidley Austin.
The Class B debtholders have calculated that Thames Water could save approximately hundreds of millions of pounds in interest payments and fees over a 12-month period if the company switches its backing to their proposal.
Alastair Cochran, Thames Water’s chief financial officer, said last month that the Class B group’s proposals, which include funding lent at an interest rate of 8%, were insufficiently detailed to garner the board’s support.
A separate equity-raising process is being run by bankers at Rothschild, with Sky News revealing last weekend that KKR, the American private equity behemoth, is the latest party to express an interest in a deal.
Any substantial pay packages for Thames Water executives – particularly at one standing on the brink of collapse – arising from the deal would be highly contentious, with the government recently having established an independent review of the industry that will look at far-reaching reforms.
A significant incentive plan would also be controversial given that Thames Water will require forbearance from Ofwat, the industry regulator, in terms of substantial fines and other penalties it is likely to have to pay because of its dire record on sewage leaks and wastage.
A spokesman for the class B group, whose members include BlackRock, the world’s biggest asset manager, declined to comment.
Business
Higher employers’ national insurance contributions to cost Sainsbury’s £140m and cause inflation to rise – CEO Simon Roberts says
Measures announced in the budget will cost one of the UK’s biggest supermarket chains £140m, its chief executive said.
The rise in employer’s national insurance contributions, announced by Chancellor Rachel Reeves in her budget last week, will cost Sainsbury’s £140m from April, CEO Simon Roberts said.
No price was put on the rise of the national minimum wage but Mr Roberts said the new measures would cause inflation – the rate of overall price rises – to go up.
The supermarket chain, the UK’s second-largest by market share, does not have the “capacity to absorb” a “barrage of costs”, Mr Roberts said so customers will have to pay more.
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He pointed to analysis from independent forecaster the Office for Budget Responsibility (OBR) which said Ms Reeves’s announcements would cause inflation to be higher than originally predicted, saying it was “difficult to disagree with”.
Mr Roberts said: “This impact on national insurance was unexpected and is coming in fast, it will have a very significant impact, it will impact our costs base… and our suppliers’ cost base.”
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When asked to quantify the inflationary effect of minimum wage rises and upped national insurance contributions Mr Roberts said inflation was already on the up, there’s “a lot of pressure in the pipeline….there’s pressure in the system in inflation already”.
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What had been expected, Mr Roberts said, was a reduction in business rates: “Business rates will go up this year I certainly didn’t expect them to go up next year I expected them to go down”.
What does it mean for staff?
When asked what the impact could be on the Sainsbury’s workforce Mr Roberts said the company had “difficult decisions to take as a result” but it was “too early to be specific”.
Earlier this week JD Wetherspoon, which owns more than 1,000 pubs across the UK, said the budget will add £60m in costs next year, while M&S expects to take a £120m hit.
Changing habits
Also announced by Sainsbury’s on Thursday morning was the return of the “big weekly shop” as people are going back to the office.
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As a result of higher restaurant prices people are also eating at home more, Mr Roberts added.
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