Higher prices on the shelves are inevitable and it is “unrealistic” that supermarkets can withstand forces pushing towards inflation, according to the chairman of the BRC.
DFS and Whitbread chairman, Richard Baker, told an industry Brexit event tonight that the plunging pound was guaranteed to lead to price hikes, despite today’s headlines being dominated by Tesco holding out against a proposed 10% increase by the UK’s biggest supplier, Unilever.
Baker said UK’s retailers had become “famous for their ability to manage cost increases without passing them on to customers”.
But he said: “Clearly, a 15% or 20% depreciation will raise import costs, and while some retailers have been able to protect themselves in the short term through smart procurement and forward currency purchases, eventually this will unwind. Inflationary pressure is building in the system, and while retailers are famous for their ability to manage cost increases without passing them on to customers, it’s not realistic to think the devaluation will not, in due course, make itself felt in higher shelf prices.”
Baker, who said he had never known such a challenging political climate affecting retail in his 32 years in business, urged the government to do all it could to help the industry cope with the fallout from Brexit.
Avoiding the impact of trade tariffs from Europe was vital, as was securing more certainty for up to 200,000 EU nationals working in retail.
“We want to make sure the government truly understands the scale and extent of the challenges retailers are facing, and that it implements new regulations and policies only where these can be shown to promote growth,” he argued.
“The Brexit process is likely to lead to considerable upheaval for government and businesses alike. In addition, the uncertainty surrounding the process and outcome may well have a dampening effect on investment and confidence overall. Against this difficult background the very last thing we need is avoidable new rules and regulations placing further burdens on businesses that need growth not only to prosper, but to survive.”
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