As oil and gas prices soar in tandem with the Iran war, supermarket sales, including BWS sales, are also taking a hit. 

As per the Office for National Statistics (ONS) this morning, it was found that UK retail sales slipped by 0.4% in February, ahead of the war, contrasted with 2% upward growth in January. 

According to the ONS, supermarkets followed this trend in line with the rest of retail, falling back from the rise they had seen the month before. 

On the data, Reuters commented that there would likely be a more extreme hit in March, caused higher prices related to the war sapping household’s disposable incomes.

Dropping confidence 

The news comes in conjunction with the latest research from the British Retail Consortium (BRC), which yesterday published data showing that consumer confidence had worsened since the conflict.

The BRC said that confidence in both the economy and personal finances has dropped to the lowest levels on record, most pronounced among the boomer generation. 

Helen Dickinson, CEO of the BRC, said: “The current conflict has created a great deal of uncertainty in the economy. Inflation is expected to rise in the coming months. 

“Just as the economy was beginning to turn a corner on inflation, the rise in global energy prices is particularly unwelcome for businesses and families. 

“It is now vitally important that government policy does not exacerbate the situation, and bringing down the cost of living must be a top priority.” 

Price increases 

Around the world, especially in India, production costs related to alcohol are also starting to be impacted. 

Earlier this week (24 March), brewers in India warned of possible price increases due to supply disruptions and gas shortages linked to the war. 

The Brewers Association of India (BAI), which represents companies including Carlsberg, Heineken and Anheuser-Busch InBev, reported that the price of glass bottles had risen by around 20%. 

At the same time, the BAI told Reuters that paper carton costs had doubled, alongside increases in packaging materials, including tape and labels. Aluminium, vital for beer packaging, is also being impacted. 

On the bloated production costs, the Confederation of Indian Alcoholic Beverage Companies (CIABC) weighed in. It said: “Brewers may find it difficult to maintain supplies in states that do not allow price increases.” 

In response, both the BAI and the CIABC have appealed to state governments to approve a price hike for consumers. 

Predictions 

As the Iran war continues, it is likely that Asia will be most impacted by direct production costs. However, it seems probable that knock-on costs around energy will impact both alcohol producers and retailers globally. 

Bracing itself for change, the Bank of England commented that it expected prices to rise more quickly due to shocks in the economy, noting that it now expects inflation to be close to 3.5% in March. 

The Bank of England continued to say that it was poised and “ready to act” against inflation, prompting some traders and economists to bet on incoming rate hikes in the near future.