The government has extended a deal to avert a fresh carbon dioxide crisis, but experts have warned it will ratchet up the pressure on food prices for consumers.

The deal, signed with chief supplier CF Industries, will see the flow of CO2 extended until early 2022. The US firm stated that the planned extension should allow the government more time to find alternative sources in the new year.

The extension comes following the suspension of CO2 production by CF Industries at its two sites in Cheshire and Billingham last month. The Billingham site was later reopened as the government stepped in, agreeing to meet the costs of running it for three weeks.

After striking the latest deal last night, the government said: “CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer.”

However, UK firms face paying more for carbon dioxide – according to The Telegraph, businesses are preparing for a five-fold increase in the price of the gas in the run-up to Christmas.

Food and Drink Federation chief executive Ian Wright said: “Although welcome news, the increased cost of buying CO2 is yet another burden on the food and drink industry, which is already facing enormous stresses.

“This will, of course, add more pressure on prices for shoppers and diners.”

The British Meat Processors Association added: “The industry has been given no detail on what the price will be or how it will be calculated going forward.

“We understand that business secretary Kwasi Kwarteng took the decision to temporarily exempt parts of the CO2 industry from competition law to facilitate this agreement.

“What we need now is some detail and transparency around how the new pricing structure will work.”

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