British shoppers should expect the cost of their weekly trip to the supermarket to increase in the wake of the Brexit vote, retail analysts have warned, as Birds Eye and Walkers became the latest brands to raise the prices of popular products.
Both brands said they had been forced to act due to increased costs caused by the falling value of the pound, which has tumbled by 18 per cent against the dollar since the EU referendum result in June.
It comes in the wake of food giant Unilever raising the wholesale price of many household products, after falls in the value of sterling increased the cost of products made outside the UK.
Retail analysts told i that consumers should brace themselves for further price rises as the economy adjusted to the UK’s decision to leave the EU – and suggested that some supermarkets may have to cut jobs in an attempt to keep costs down.
Crisp maker Walkers said it was making “selective cost price changes” to some products due to “fluctuating foreign exchange rates”.
As a result, a 32g standard bag of Walkers crisps is set to increase from 50p to 55p, while larger grab bags will rise from 75p to 80p.
“Since we do not set the retail price of our products, it will be for individual retailers to determine the impact on the price at which they sell our products,” a spokesman said.
Sign of things to come
Birds Eye, which makes fish fingers and other frozen products, is reportedly set to raise its prices next month.
UK managing director Wayne Hudson said many of its raw materials were priced in dollars, adding that “the fall in the value of the pound since the EU referendum has meant that our costs in sterling have risen”.
Richard Hyman, an independent retail analyst who advises several big companies, said it was a sign of things to come.
“There is no question that given the extent to which what we consume is imported in this country, we are going to be having more inflation,” he told i.
However, he added that many retailers – including the big supermarket chains – would be reluctant to pass price increases straight onto customers because they were already under pressure from discount chains such as Lidl and Aldi to cut costs.
“It’s one thing to try and protect your margins by increasing your prices, but that’s not really going to work if you sell less product,” he added.
“That’s the dilemma for them. They’re caught between a rock and a hard place.” Instead of raising the prices of common brands, the retailers may instead try to save money in other areas, which could lead to supermarket workers facing redundancy.
“There are going to be some job losses,” Mr Hyman said. Michael Hewson, chief market analyst at CMC Markets UK, said customers should prepare to pay more for their favourite brands in the wake of the Brexit vote.
“There probably will be price rises coming down the pipe,” he added. “The big question is: will they be over and above what average earnings are?”