Suppliers warn that the tumbling pound could drive them out of business.
The pound has fallen almost 25% against the dollar in recent months, and nearly 20% against the euro. Though the UK, which imports almost half its food, does not import much from the US , many world commodities are price d in dollars, and this has made them more expensive.
"This will have a huge impact, which is likely to hit on 1 January as people's currency hedging expires," said a leading branded supplier. "UK manufacturers will suffer and in the current retail climate it's very difficult to get price increases. But for suppliers who trade mainly in dollars, the currency hit could easily put them out of business if they can't pass on costs."
Companies trading with the Eurozone had felt many of these effects earlier in the year, he said, and were unable to recover any of the 16% to 17% cost hit. "The dollar hit will be even bigger," he predicted.
Analysts warned the pound could fall further if the Government failed to reassure world markets it had a clear plan to pay back its increased borrowing.
Expected interest rate cuts would have little impact on the pound if other countries followed suit, they said. However, the impending recession meant the pound's fall was unlikely to prompt large retail price increases.
"We import a lot of food, so currency movements can't help but have a big impact ," said Séan Rickard of the Cranfield School of Management. "But there are two big forces coming together - recession and the falling pound. We believe the recession will have the bigger impact - food inflation will fall - but currency movement means food prices will keep growing, albeit more slowly."
There would be an impact on prices of home-grown commodities too, said National Association for British and Irish Millers director Alex Waugh. "As we're more reliant on imports than usual, the beneficial effects of falling wheat prices will be dampened," he said. "But this will also increase domestic prices ."
The pound has fallen almost 25% against the dollar in recent months, and nearly 20% against the euro. Though the UK, which imports almost half its food, does not import much from the US , many world commodities are price d in dollars, and this has made them more expensive.
"This will have a huge impact, which is likely to hit on 1 January as people's currency hedging expires," said a leading branded supplier. "UK manufacturers will suffer and in the current retail climate it's very difficult to get price increases. But for suppliers who trade mainly in dollars, the currency hit could easily put them out of business if they can't pass on costs."
Companies trading with the Eurozone had felt many of these effects earlier in the year, he said, and were unable to recover any of the 16% to 17% cost hit. "The dollar hit will be even bigger," he predicted.
Analysts warned the pound could fall further if the Government failed to reassure world markets it had a clear plan to pay back its increased borrowing.
Expected interest rate cuts would have little impact on the pound if other countries followed suit, they said. However, the impending recession meant the pound's fall was unlikely to prompt large retail price increases.
"We import a lot of food, so currency movements can't help but have a big impact ," said Séan Rickard of the Cranfield School of Management. "But there are two big forces coming together - recession and the falling pound. We believe the recession will have the bigger impact - food inflation will fall - but currency movement means food prices will keep growing, albeit more slowly."
There would be an impact on prices of home-grown commodities too, said National Association for British and Irish Millers director Alex Waugh. "As we're more reliant on imports than usual, the beneficial effects of falling wheat prices will be dampened," he said. "But this will also increase domestic prices ."
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