Forget oil. Here's how Russia's war in Ukraine is jacking up food prices.
London (CNN Business)The United Kingdom’s fish-and-chip shops are under severe strain as the prices of key ingredients — including cod and cooking oil — soar as a result of the Russian assault on Ukraine.
As many as a third of the country’s roughly 10,000 fish-and-chip restaurants could close in the next nine months, said Andrew Crook, president of the National Federation of Fish Friers. The crisis is the worst he’s seen, he told CNN Business.
The trade group represents 1,200 fish-and-chip businesses, and has been running for more than a century.
Crook, who owns his own shop, said prices started rising toward the end of last year, but the costs of staple ingredients have shot up since late February, when Russia invaded Ukraine.
“Across the board, everything’s gone up,” Crook said.
Businesses across industries are struggling with soaring prices as supply chain snarls have been exacerbated by the war in Ukraine. But British fish and chip shops, which traditionally operate under very narrow margins, are feeling a particular squeeze because of the industry’s reliance on Russian imports.
Up to 40% of the industry’s cod and haddock come from Russian waters, and about half of its sunflower oil is imported from Ukraine, Crook said.
Businesses are paying about 83% more for sunflower oil compared to early March, according to Crook. Palm oil, a common alternative, has doubled in price. Indonesia — the world’s biggest exporter of palm oil — started to restrict exports last month to help maintain domestic supplies.
Adding to the pain are eye-watering energy bills and rocketing prices for fertilizer needed to grow potatoes.
Fish and chips is one of the UK’s unofficial national dishes. The first shops opened in the 1860s and spread rapidly as the country industrialized, helping to feed factory workers, according to the trade group. During World War II, as the government rationed other staples such as tea, butter, meat, fish and chips were exempt, so important was the dish to the working classes.
Customers expect their fish and chips to be cheap, Crook said. A year ago, the average price for a regular cod and chips would be about £7, Crook said. Now, he estimates it’s around £8.50 — a 21% increase.
“We are running the risk of pricing ourselves out of the market…we’re trying to keep increases as low as possible,” Crook said. Some have already turned away.
“I’ve lost some regular customers that used to come every Friday,” he added.
Fears that the UK government will impose harsh import tariffs on Russian white fish have pushed businesses to stock up on alternatives, further jacking up the price of the Icelandic and Norwegian fish that Crook buys.
The price of a case of Icelandic cod is now £270 ($331), up from £140 ($176) this time last year, Crook said.
Businesses like Crook’s face the uphill task of selling fish and chips to customers facing the worst cost-of-living crisis in decades. Annual consumer price inflation hit 7% in March, its highest level in 30 years, and could hit 10% later this year, according to the Bank of England.
More than half a million small businesses in the UK — that’s about one in 10 — plan to shut, downsize or sell up in the next year as many struggle to secure financing, according to a survey by the Federation of Small Businesses.
For Crook, the fate of his shop is personal.
“It’s more than just a job. For many of us, we’ve taken on family businesses,” he said. “I’m second generation in the business — and you don’t want it failing on your watch.”
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