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1:20They have yellow sales signs on ready-to-cook beef or chicken kebabs too. Level up with savory marinades, spices, and rubs, and complete your cookout with a crowd-pleasing cherry pie and their balsamic chicken salad. Available at the prepared foods counter. Get Summer Splash savings now at Whole Foods Market. Wake Up to Money from BBC Five Live. Hello, welcome. It is Wake Up To Money and the show today is about prices, prices and prices. As fuel prices continue to rise in recent days to the highest we've seen in years, the UK has loosened sanctions on Russian oil that is used to make diesel and jet fuel.

2:05We'll get the very latest on what that means for the UK's relationship with Russia, how Russia makes its money, what that means for supply in the UK. then we turn to our supermarkets is a price cap for groceries right across the UK on the cards. The UK government now is pushing supermarkets to limit how much we pay for some items and the shops aren't too impressed. It's not just here where high prices are being felt on the continent as well. We're going to hear from Europe's largest tomato producer ends up on our shelves in the UK facing the consequences of a difficult market. What we can do is wait and pray.

2:48And what's happening to the price of a pint, the supply of a pint? Where is it made? We're going to be talking all things beer as the classic British ale, Old Speckled Hen, has been moved breweries and moved away from Suffolk. Wake Up To Money with Sean Farrington. Good morning to you. Wake Up To Money on BBC Five Live. It's Wednesday morning, the 20th of May. It's just after five o 'clock and there is a lot to get our head around today. So let's us all fire in our questions. We've got experts galore. We'll try and get through as many of the topics that I mentioned in the papers that we're hearing about from our own correspondents at the BBC this morning to do with the prices we pay in the supermarket, the cost of fuel in our cars and vans and airplanes as we look to make our holiday plans for this summer, next summer perhaps as well.

3:42What's happening to costs in the supermarkets? All dominating the chat this morning. I've got Judith McKenzie here with me in the studio in Salford, partner and head of Downing Fund Managers. Judith, very good morning to you. Good morning. And when you see, Judith, that there's just an array of things being talked about by the government, things being talked about by other businesses about prices, does it feel to you like, I mean, we've talked about prices and price rises and the squeeze for years. Has something changed in recent days again that has meant we're getting this flurry of action? Everything changes in recent days at the moment, doesn't it?

4:17I mean, I think every time I speak to you, we talk about the headwinds that are facing the UK markets and the consumer. And yes, we've now got some other ones as well just thrown in there. So you've got to be resilient as a fund manager at the moment. And so how do you see the prospects for all, the price action, as it's called, whether it is on the supermarket shelves or whether it's just general costs globally over the coming months. Is there something that has, I don't know, made the government think, we'll get more into the loosening of sanctions on Russia in a moment, made the government think this is the moment, after everything that has gone on and going on with the Russian war in Ukraine, that this is the moment to actually loosen some sanctions?

5:04I think, well, there's a wee by-election coming up, isn't there? So I think there's quite a lot to do politically. where they feel as though they need to get some decent headlines. Well, that's very interesting because, yeah, the Treasury, Rachel Reeves making a lot of the headlines and in the headlines today as well. Reasons to be cheer fuel is the headline on page eight of The Sun where they say that Rachel Reeves will help shield shoppers from crippling food price hikes by keeping trucking costs down. So that's another aspect that we may well see. extending the five pence fuel duty discount for drivers as well.

5:42The Sunken reveal she will offer hauliers extra support in a bid to keep shelves stocked and the economy moving. So a lot to do with that fuel duty hike that may well have been coming into play. Seemingly, the Road Haulage Association have been demanding that that be scrapped and wanting extra help to lorry drivers as well. So we've got all that on the cards. David Keane is also with us this morning. Chief Executive of Origo, develops and makes a range of automated baggage handling systems and vehicles for use in airports. David, good morning to you. Morning, Sean. Great to be back on the programme again.

6:21Always good to talk to you, David. I don't know if jet fuel necessarily trickles down to being part of your business, getting your vehicles around airports. But no doubt the wider conversation at some of these airports, what might change the pattern of flights and demand for airports in the coming months must surely be linked to whether there's enough fuel supply to get around. Yeah, exactly. We have a situation where there's pressure in all areas. And this just dampens down our ability to scale and get around the world and sell our products. So at the moment, we haven't seen that effect. And I'm keeping my fingers crossed that someone is going to see sense and tidy all this up very, very quickly and get us back to where we were, which was actually a very expanding airports and global travel and global cargo business.

7:22So that's what we need. Let's get the very latest on what is happening with these oil sanctions. So the UK loosening Russian oil sanctions, particularly it seems on Russian oil that is refined into diesel and jet fuel in third countries. So other countries that are taking that oil from Russia, turning it into diesel and jet fuel, loosening sanctions. The UK is on that. Robin Mills is chief executive of Kamar Energy, an energy consultancy based in Dubai. Robin, very good morning to you. Can you just explain, you know, we've spoken to you many a time over recent days, weeks, months, years about the varying moves in the oil and gas prices, what's been happening in the Middle East of late.

8:07But this, what is going on here for the UK government that has been one of the governments that has been trying to lean on Russia as much as possible since, we're told, since the war in Ukraine escalated, now loosening sanctions with Russia? Yeah, exactly. So, you know, this was actually a fairly recent measure anyway to put this ban on importing products that were refined from Russian crude oil. That really practically applies to India and possibly Turkey. So, you know, the idea is that they import Russian crude, that they refine it into jet fuel and diesel, and now we'll be able to sell it to the UK and, you know, hopefully avoid fuel shortages in the UK because of doing that.

8:54So when you say it's something that has been brought in, the actual sanctions themselves on these specific products were brought in more recently. So how recent was that? How long were we actually, after Russia's full-scale invasion of Ukraine in 2022, were we still using some of the products from Russian oil? Well, for several years, and there was a bit of, I think everyone knew this was an issue. That's partly why India boosted its imports of Russian oil so much, because it had an outlet for the surplus going to Europe, including the UK. So a bit of a reminder, Robin, when you talk about sanctions on Russia and its oil, about how reliant we still are on that.

9:46well exactly because the you know the uk has run down its own refining capacity so it's reliant on imports of fuel from others and that a lot of that of course was coming from the gulf that's now been cut off other parts were coming from from india and this idea was to force the indian refiners to use other crude oils but now of course they can't get oil from the gulf either but they can still get still get russian oil we've had a similar move by the united states well, on these refined Russian oil in recent days, but also a loosening of various sanctions on Russian oil in recent months as well, haven't we?

10:22This isn't the first step of sanction loosening. That's right. And the US measure was a little bit different. In fact, the US put that into place almost at the start of the war in allowing a sale of Russian oil that was already on the water at the time of the measure. So that's actually lifting sanctions directly on Russian crude oil, and they've done so again now. So given this now will effectively allow imports of, say, jet fuel from India, which, as you say, has been a key supplier to the UK and to Europe for some time previously, how much benefit is Russia seeing from the overall loosening of these various sanctions in time?

11:10Because the point of them was to lean on Russia economically. Well, it was. And to be honest, I'm not sure this has a huge impact either on the UK or on Russia. Look, everybody's desperate for jet fuel right now. And I'm sure those Indian refiners would have easily found a market in probably in Asia. the fuel anyway so whether any of this fuel actually comes to the uk who knows so economically does it have a big impact probably not but there's obviously a key signal here which which that would be my concern with it sending a signal to russia about about a lack of resolve on keeping up the sanctions on russia in the face of the gulf crisis and why is that a concern where do you think that could go next.

11:57Well, as the crisis in the Gulf gets worse and the oil and other fuel prices rise, I think there'll be a hope in Russia that more sanctions will be eased and perhaps Europe and other European countries will join this and perhaps we'll ease some of the other sanctions on direct imports of Russian oil, on imports of Russian gas. Who knows? I don't know if we're going down that path, but as the crisis gets worse, I'm sure some will say that we should lift those sanctions. Will this make any difference to diesel and jet fuel prices that UK drivers, those airlines that are flying in and out of the UK will be paying?

12:42Well, you know, the prices are going to keep going up as long as the crisis in the Gulf isn't resolved. But I think the concern here was that there would have been a physical shortage of jet fuel in the UK. I don't believe that probably would ever have happened. I think the jet fuel would always have been available just at high prices. But I think this measure, the idea probably is to say let's try to avoid actual physical shortages over the summer holiday period. Does this tell you that you may be closer to those shortages than you previously thought? Well, as I say, no, I don't think we would have seen physical shortage in the UK personally.

13:18I just think prices would have gone high for everybody, not especially the UK, because there's clearly a big shortage of jet fuel and diesel in particular. I mean, those are the two fuels that have been most affected by the war. So I think prices would absolutely have gone high and would probably keep going higher. But I don't think we're doing a case of physical shortage where airlines who were willing to pay the price somehow couldn't get fuel. Robin, very much appreciate your time this morning. Robin Mills, Chief Executive of Kamar Energy, energy consultancy based in Dubai. Judith, what do you make of the developments?

13:55Well, I always thought that sanctions were there to maybe punish, but it doesn't feel like it, does it? So somebody's getting paid for that oil. I think looking at the quoted markets, so Jet 2, they're really well hedged. So that's quite reassuring for consumers. They've bought their fuel well ahead. They've bought their fuel well ahead at the start of the year. And they've had a no surcharge mentality. Their capacity is up 7.7 % this year. and passenger bookings are running up 6.2%. You look at some of the others in the sector, like IAG, which is British Airways, and Lufthansa, they haven't bought fuel ahead quite as much as Jet2.

14:33So I think there's going to be a bit of a disparity between some of the providers out there, some of the airlines. So I think the consumer just needs to be careful as to who they're booking with. David, you're running a business that is very much at the heart of airports around the country. What has been the ripple effect of the increasing costs for airlines? Well, just coming back on this point a little bit for answer that, you know, the optics. I mean, for a layman who doesn't really understand how oil gets around the world and what happens and who does what, the optics of this looks really poor.

15:11It looks like we don't have any leverage at all and other people have got leverage over us. I think it also brings into question the UK's policies of having some sort of sovereign capability in these areas as well as other energy sectors. So I think it all brings a lot of focus on what we're doing in the UK or what we're not doing in the UK to think about how we protect ourselves from some of these global shocks. because obviously whatever we're doing to try to leverage other people to stop doing things like invading Ukraine are clearly not working. And actually, they just think, well, if we sit out long enough, we can cause massive damage to us and other countries.

15:54So I think this is a bigger issue for us personally. As I said before, it hasn't quite rippled down yet. But certainly if somebody ran out of jet fuel, it wouldn't just be us that would have a problem. You know, we would have a serious UK and an international problem. And how long that would take to resolve is unknown. And that impacts on a whole vast amount of other things like, you know, it's not just about people, you know, in jet to, you know, going on holiday. What about all the cargo that is flown around the world? You know, what happens to that? and that is a mixture of anything from foodstuffs all the way through to pharmaceuticals and critical items.

16:37So this needs a really big look about UK sovereign capability and goes into a wider topic of that for me. Yeah, it really is a topic that touches on so many different things. So we've got the relationship of the UK and its trading relationship with Russia and its support of Ukraine. When we've talked about in previous weeks some of the other loosening of sanctions that have taken place, the US in particular loosening some similar type of sanctions. We've heard those quotes from President Zelensky in Ukraine saying every dollar paid for Russian oil is money for the war. And we've heard comments from the likes of Emmanuel Macron in France saying that the shutdown of the Strait of Hormuz in no way justified lifting sanctions on Russia.

17:28Now, some of the sort of small print around this, when we read about the sanctions and the changes the government making. So the government, the UK government is saying that overall sanctions had got tougher, but extra flexibilities were required. And it seems like there's been some increasing of other aspects of sanctions on trade with Russia and Russian products in particular. but the overall aim of this has been to loosen those sanctions on some of those products that are refined in India and Turkey in particular. Interesting, David, as well, you've got that whole geopolitical aspect and the level of support for Ukraine and where the UK is on that and how Ukraine may feel about that.

18:22And then going right through, as you say, not on the list of priorities as high as what may be going on in Ukraine, but some of the consequences will still be there about what happens to the airline industry, the holiday industry, the cargo. Now the civil aviation regulator in the UK is warning airlines against selling tickets for flights that could get cancelled due to fuel shortages this summer. I mean, you know, it's strange that on the one hand we hear from Robin and we've heard from a lot of airlines, you know, right now saying this week, no concerns about shortages, but keeping an eye on prices.

18:55Yet, you know, there's still sort of that feeling the regulator warning airlines don't sell tickets that you might not be able to actually complete the flight for later in the year. When you talk to people in the industry every day, is there more uncertainty about the summer than there was before? yes i think well everything about business is all about confidence and if you don't have confidence then it makes it very very difficult and that could be anything from uh you know does somebody invest into the uk into uk companies or does somebody all the way through to using your product and and actually as soon as people start to question confidence that is a really bad position because you get a spiral down.

19:42And actually, this is how we've had other things happen to the UK where you can talk yourself into a problem that may not exist. And I think the issue here is there's a real lack of clarity as to are we short of fuel or are we not short of fuel? You know, one of your guests just said, well, I don't really think it's going to have a major impact. And then we hear the CAA saying, well, it will have a major impact. Exactly. Where is our position and how bad or not is it? Because actually, if somebody was able to quantify that, then that would position us to actually, crikey, we've got to do something.

20:26Or actually, we haven't got to do something because it's all okay. And therefore, you get confidence back into the market on many levels. Well, look, we're going to have a similar conversation about what's going on in supermarkets and the price of food in a moment on Wake Up To Money as well. 85058, your thoughts, please, on all of these latest developments. Wake Up To Money from BBC Radio 5 Live. Right, so good morning. It's Wake Up To Money on BBC 5 Live. To the shops we go now to see what might be happening in supermarkets right across the UK. It's a topic that we've talked about in Scotland in recent weeks and hearing more about it in recent days In the run-up to the elections a few weeks ago, we were talking to the SNP about its proposals for supermarkets to have caps on certain foods that they stock.

21:23And we heard how various supermarkets and those in the convenience store sector were not too impressed by the concept of that. Now we have the UK, the wider UK government, talking about similar policies. So in the Financial Times, it was the first to this story. Ashley Armstrong there was talking about the Treasury asking supermarkets to cap prices on staple foods. Now, Judith, this one seems to be a voluntary request at this point, but a bit of a quid pro quo. So if you cap the prices of essential goods, eggs, bread, milk, then in return there may be incentives which mean that supermarkets might be able to have fewer packaging policies that were due to be on their way.

22:19It could delay changes to rules around healthy food. What's the consequences of this if it all plays out? kind of unbalances the market a wee bit, doesn't it? It doesn't seem that fair. So if they're getting an incentive, if a big supermarket's getting an incentive, a smaller company, a smaller shop isn't. And therefore you're going to potentially get people getting in their cars, using fuel, going down to their supermarket to get some cheaper prices and then actually not going to their local shop. It seems as though it's going to distort the market too much. So, yeah, I don't quite buy into this one.

22:59David, your thoughts? Well, I agree, actually, with what Judith has said. I don't really get this. It's a cyclic thing. I mean, it's ridiculous that you get to the point where it costs you more in fuel to go to the shops and get the price that you want. And you're paying for the extra petrol. So maybe it all gets us onto our bicycles and gets us more fitter and we can get out of our cars. I don't know. Who knows with the government? They might have some other theory that they want to try out on us. The idea that there's clearly something driving the UK government, the Scottish National Party's aims here, isn't there, David?

23:48that there is a fear, I mean, just to quote the Foreign Secretary Yvette Cooper in the Financial Times, they have a quote here, warning the world, is sleepwalking into a global food crisis. I mean, could it be that there is a concern that the price of some of this stuff, milk, egg, bread, front page of the Times, could get out of hand? Well, potentially, and this is all bad news, isn't it, for the government at a time when they need really good news. But if we just strip that away and look, we have over a long period of time not invested, in fact, put regulation or other factors into our own domestic farming economy to generate our own food.

24:40And we've reduced and reduced that. And we've become more reliant on overseas products that are being shipped into the UK. And if you look at some of the areas with some of the global environmental things that are going on with floods and extreme temperatures and those are and energy costs that we've been talking about, these all lead to push prices up. You then haven't got any jet fuel to fly all this stuff in. So if you want your avocado to come in from South America, it's going to be more expensive. and people will then start to find that they've got less to spend on all the other things they want to do because food prices are going up.

25:24So you get this spiral. And then, of course, as an employer, I'll get people coming through my door saying the cost of living is so high now, can I have a pay rise, which puts pressure on companies. So this, as I said before, this whole thing becomes a spiral down and we have to really try and get a grip of some of these items. and unfortunately it is a complicated thing to get a grip of and needs time. John in Woodbridge has been in touch saying, morning Sean, good morning to you John. He says, as we know, those that grow and rear the produce that the supermarkets provide will have to take the hit.

25:58They'll go bust and food prices will increase anyway, same as it ever was. Interesting that the Treasury has told supermarkets it would like guarantees that UK farmers would not lose income if price caps were introduced. So that's what the Financial Times reporting there. And also flagging that there's up to 60 ,000 products in a big supermarket, but some of those basics are frequently, the most frequently bought. And Tesco's profits recently, 8.5 % rise in annual pre-tax profits to almost£2.5 billion on£67 billion of sales. If you've been shopping in your supermarkets and looking at those tins of tomatoes in that section of the aisle, you may well have noticed the, is it a slightly posher brand of tomato, the mutty brand of tomato passata and tomato, tin tomatoes and all of that.

26:53We were talking about this on the Wake Up To Money team yesterday because we've been hearing from the boss of one of Europe's largest producers of chopped tomatoes, calling it a period of strong instability. That's what the boss has told us on Wake Up To Money, warning that rising energy costs could lead to price increases. So this will be a bit of a flavour of what is impacting so much of the food costs right across the supermarket. Our very own Jeevan Nerwan has been speaking to Francesco Mutti. He started off by telling Jeevan how energy costs are feeding through to his business. The energy costs in our sector comes from each phases of the production.

27:33So let's start from the tomatoes. Cultivating tomatoes requires energy. All the fertilizers are strongly impacted from energy because tractors to pour the soil or to make the harvest, the fuel for the tractors increasing significantly. Then there is the industrial part that deals with concentrating the tomatoes from one side and eating them for the pasteurization at the end of the process in the bottle or in the tins. And then we have the cost of the energy for the packaging. Let's think about the bottle of glass. The glass is strongly an energizer product and the same is for a tin. And then finally, we have the transport costs that can be a truck or can be eventually a ship.

28:23In both cases, obviously, the food has a very significant impact. And eventually, if the energy costs are too high, they will ask for an adaptation of the contract itself, even if it's already been signed. Will you be able to absorb those higher costs or could customers see higher prices? The objective of the company is to maintain the prices as they are. And the production in our sector is very simple because you have four major costs. One is the tomatoes, the one is the packaging, one is the energy and the other is the manpower. We cannot accelerate our machinery because they always run at full capacity during this short period.

29:06We do not have possibility of changing the recipes. It's not something that is composed by different ingredients. It's just tomatoes, basically. And so you cannot change, obviously, the cost of the tomatoes, nor the energy, not the manpower, not the packaging. Have you been having conversations with supermarkets about what that could look like? Well, supermarkets are living the same situation. They are quite terrified by the increase because the big element of inflation is that everybody receive a squeeze, a reduction in their margins. So we are extremely worried, us as a producer, the supermarket, as a distributor, we are doing all the efforts to try to reduce as is possible all these costs.