Iceland boss warns cost of living crisis is 'single biggest domestic issue' facing Britain

Richard Walker, managing director of Iceland Foods, said supply chain challenges, increasing costs and labour shortages have all played a part in food and drink price rises, and warned the impact of the war in Ukraine has only exacerbated the crisis.

The price of goods such as milk, butter and bread could increase by up to 50 per cent in the coming months as the food industry seeks to offset rising costs.

It comes as energy prices in the UK surge by 54 per cent this month, increasing the average household bill by about £700 a year. Council tax bills and National Insurance contributions are also going up.

Mr Walker was speaking at the annual business lunch hosted by Moreton Hall, near Oswestry, last week. The event has previously been attended by his father, Sir Malcolm Walker CBE, who founded Iceland as a sideline business in 1970 and opened a single small shop in Oswestry selling loose frozen food with capital of just £30.

"Food inflation at shelf is well above 10 per cent now," said Mr Walker. "Four pints of milk was in our shops for a quid just over a year ago – it's now £1.25 and actually we lose money off that at the moment.

"That's because of the wave of different inflationary pressures – from commodity price pressures, oil, which effects the price of everything, lack of workers in abattoirs and pickers in fields, to a lack of fertiliser because it all comes from Russia, through to national minimum wage and everything else in between.

"We talk about, rightly, consumers and their rising energy bills but there is a cap. There's no cap for business and our energy bill last year was £45 million. Next year, minimum, £140 million. When you consider that, we are not an endless sponge which can keep absorbing all of these cost headwinds and that is why we have to pass it on.

"I think this cost of living criss is the single biggest domestic issue facing our country today," he added.

Ukraine produces much of the world’s wheat, barley, sunflower and maize, while Russia is a major exporter of fertiliser.

The invasion has led to a dramatic decline in the number of crops planted by Ukrainian farmers, and sanctions restrict Western business importing goods from Russia. The latest figures show food inflation has risen by 5.3 per cent year-on-year – following several months of price hikes.

Chancellor Rishi Sunak has unveiled some measures to help ease the cost of living crisis for families, including a one-off £150 council tax rebate for some households, a £200 loan to assist with energy bills, which comes in October, and a rise in the threshold for paying national insurance in July.