‘Buy British’ is one of the most important lessons to emerge from the impact the Middle East conflict has on household budgets and the cost of living.

That’s according to a leading UK procurement business, which says Britain needs to place more emphasis on food and energy security as an island nation and become more self-sufficient.

Soaring fuel and food prices might be regularly grabbing the headlines at present, but Regency Purchasing Group is raising awareness of the hidden costs of the war in the Middle East which pose some of the biggest threats to hospitality businesses.

Regency says the closure of the Strait of Hormuz could adversely affect costs long after the fighting stops because of a delayed effect on pricing and supply chains and suggests that  that we need to be prepared for the medium and long-term impact of the war, claiming prices could continue to rise for a further nine-to-12 months after the conflict ends.

Alex Demetriou, founder of RPG and CEO of Foodbuy UK&I, said:

“As we saw during the pandemic and at the start of the war in Ukraine, the immediate impact is often felt in areas such as fuel costs.

“But the knock-on effects across wider supply chains can linger for months, and in some cases more than a year, before pricing stabilises.

“However, we have to believe that the UK can adapt and recover over the long term.

“A key part of that recovery must involve better use of nation’s own resources and strengthening domestic production and supply chains.

“Many consumers avoid buying British produce because it can be more expensive. But without consistent demand, British farmers and growers struggle to achieve the volumes and scale needed to bring prices down.

“The more we invest in British agriculture, the stronger our food security becomes, as an island nation.

“That requires action on three fronts. First, government must do more to support farmers and encourage the right long-term behaviours.

“Second, consumers should be encouraged to buy British, even if it costs slightly more in the short term, because the long-term benefits will come.

“And third, industry leaders (like us!) need to provide farmers with greater certainty through long-term contracts and investment support, giving them the confidence to plan ahead, improve efficiency and become more competitive.

“For example, with one project, we pay an extra 10p per dozen eggs back to farmers, which quickly accrues to around £10,000 per month, which they plan to invest in a new project each quarter, in areas such as regenerative agriculture, animal welfare, carbon reduction, risk and resilience and other areas.

“If we get that balance right, Britain will be far better prepared for future global shocks, and the impact on household budgets will be far less severe.”

Since the war started on February 28, the RAC says the average price of petrol rose by nearly 25p a litre, with diesel prices increasing by almost 46p per litre.

But Mr Demtriou said these headline-grabbing statistics mean some may be overlooking the ‘hidden costs’, such as those involving fertilisers and plastics, which may take months to be fully realised, increasing the pressure on a UK hospitality sector which was already struggling with a challenging financial climate before the war started in February.

Businesses are not only facing further cost increases because of the conflict’s knock-on effects, but household budgets are also coming under pressure, leaving families with less disposable income to spend on “luxuries” such as eating out and supporting hospitality businesses.

However, there are some signs of resilience. Regency says it has so far been able to use its buying power and sector expertise to limit the impact of rising prices on its members.

Founded in the South West, Regency Purchasing Group is part of Foodbuy, the UK’s largest buying group, and its scale and buying power are helping to shield the businesses it supports from many of the rising costs affecting the food and beverage sector.

Alex added:

“So far, we have worked through 17 separate price increases, mainly through consolidating and growing our business with suppliers, which has allowed them to offset the increases they are receiving which, in turns, means our members are not currently seeing those additional costs passed on to them.

“We have a dedicated team monitoring the ongoing impact of the conflict in the Middle East on a daily basis, alongside a weekly focus group that continually assesses developments and responds to any changes in the market.

“It is easy to be distracted by news focusing on the immediate impact of rising fuel prices and higher supermarket bills, but there are wider cost pressures moving through supply chains that may take much longer to materialise because of the lag effect.”

“For example, many national distributors purchase fuel through long-term fixed-price contracts, meaning the fuel being used today was bought at lower rates.

“When those contracts are renewed, however, suppliers will face higher prices and those additional costs are likely to be passed on further down the supply chain. In other words, the full impact of today’s fuel prices may not be felt immediately.

“There’s a similar situation with fertiliser, the cost of which is also impacted by fuel costs. Much of the produce currently on shelves was grown using fertiliser purchased months ago at lower rates.

“Crops being planted now and over the coming months will rely on more expensive fertiliser, but those increased costs will not reach consumers until the produce enters the market, potentially six months or more from now.

“So, even if the war was to end within days, business and consumers will still see some costs increase, rather than decrease, for some time to come, and it’s this kind of medium-to-long-term impact of the conflict that is not being thought about as much as the immediate ‘front line’ price-hikes.

“Petroleum is a key component in plastics, so once again there is a delayed effect. The raw materials are being bought at today’s higher prices, but those increased costs may not be passed on until the finished plastic products reach the market. That is the true long-term impact of the war.”

He added:

“Businesses need expertise, focus and strategic support to navigate the challenges ahead, and we are fully committed to doing everything we can to support this industry.

“That is why we are working hard to do everything we can to support the industry and help its long-term recovery. Consumers can play their part by buying British.”