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As the Cost of Living Crisis continues to worsen, we look at how continued Rising Energy & Fuel Costs will ensure the price of Food & Essential products, will only continue to increase.
Why are the prices of Food & Essential Products increasing?
We are all noticing how the Cost of Living Crisis is starting to really affect our disposable income. Whilst enjoying time with friends or purchasing treats including takeaway food, we have all started to notice our weekly budget is increasing at quite a pace.
Furthermore, when out shopping for essentials, we have started to see over the Last 12 Months the Average Price increase quite rapidly. In May 2022, the Office for National Statistics reported Food and Drink prices were up by an average of 6% year on year, however noting a selection of everyday essentials, including Pasta & Milk, had seen an annual increase of more than 10%
The CEO of the British Retail Consortium, Helen Dickinson, confirmed the rises were because of a continued climb in commodity, energy, and transport costs.
What are the driving forces to these increases?
As confirmed on the 9th June 2022, the average price of filling a Standard Family Car with Petrol or Diesel exceeded £100/Visit for the first time in recorded history, with experts warning the price per litre will exceed £2.00 in the very near future. Unfortunately, due to most Food and Essential Products using Processing, Manufacturing & Transportation methods that require Diesel of which, on average, is around 10p/litre higher than Petrol, these charges are passed on to the consumer.
With regards to the Ongoing Energy Crisis, as well documented, the OFGEM Domestic Price Cap is set to increase significantly to £2,800 in October 2022, following on from record rises, effective April 2022.
Although this Cap has never affected Commercial Energy Agreements, as prices are secured on the Live Wholesale Market. The overall benefit of this ensures that any Commercial Energy Agreements secured, are based on live pricing, rather than when the Energy Price Cap is reviewed every 6 months. In a declining market this method is extremely beneficial, however in this current climate of Rising Costs, it unfortunately means prices can increase with no limit.
But why are Fuel & Energy Prices seeing high increases?
Fuel Prices were already on the rise prior to Russia’s invasion of Ukraine, due to the increasing price of Brent Crude Oil as Worldwide Economies emerge from the COVID Pandemic. In March 2020 as COVID raged across the world, Brent Crude Oil Costs hit a low of $20/Barrel.
With major economies reopening, oil prices gradually rose due to stronger demand, and that largely remained the case, prior to when the Major Oil Producer, Russia, invaded Ukraine. These implications, coupled with the impact of Western Sanctions on Russia, forced Brent Crude Oil Costs to increase above $100/Barrel, hitting a peak of close to $130/Barrel.
Unfortunately, with no Commercial Price Cap on Energy, and the cost of Electricity & Gas continuing to increase in line with Fuel, these rising prices are forced onto Businesses, and in turn onto the consumers. These ongoing energy issues are more of an issue for Food Stockists, Manufacturers and Producers, due to the Energy Intensive Nature of equipment required.
Is there anything Commercial Businesses can do to reduce ongoing costs?
CostAdvice - Energy Specialists are here to help, and we are on hand to offer a Full Energy Health Check on all of your current supplies & agreements.
Why a health check?
Did you know that not all business energy contracts are the same?
Also, not all businesses should be charged the same costs.
Our health-check looks deeper than just looking at your rates.
We recently identified £10,000 of annual savings for a Museum Group that were already being looked after by another broker.
If you would like any further information regarding the above, or if you have any questions relating to your Commercial Energy Agreement, please contact Daniel Walker on 01246 252788 or by e-mail at email@example.com, and he will be happy to help.