Hard boiled Brexit: consumers scramble as fry-up prices set to soar
(ShareCast News) - Britain's departure from the European Union could lead to a 13% increase in the traditional fry-up, according to a report that examined potential food prices from leaving the single market.
Consumers could see the price of imported foods such as olive oil, bacon and sausages rise, with accountancy firm KPMG estimating that a typical family breakfast would rise from £23.59 to £26.61 following Brexit.
The UK is likely to leave the single market at the conclusion of negotiations with the EU in 2019, potentially driving the price of many consumer goods to above-inflation prices.
The value of the pound has fallen sharply in little over a year since Britons voted to leave the bloc.
A bottle of mid-range Italian olive oil could rise from £3.60 to £4.68 according to KPMG, while the price of a 500g pack of butter could reach as high as £4.08. No calculation was given for the price of lard.
Other fry-up staples such as bacon, sausages, orange juice and mushrooms may see price increases if such products become subject to World Trade Organisation tariffs.
"WTO tariffs could have a significant impact on both consumers and retailers alike - totting up consumer price tags and further squeezing retail margins," said Bob Jones, KPMG director.
"It's important to remember that our analysis does not even reflect the steep costs consumers and retailers are already facing as a result of the pound sterling's devaluation or the costs of any new non-tariff barriers."
Paul Martin, head of retail at KPMG, said supermarkets had by and large avoided passing on price rises related to the fall in sterling, but that would change if no trade deal is agreed post-Brexit.
"Shoppers could be forgiven for overlooking the significant impact customs will have on the prices they pay at the till. However, against a backdrop of increasingly squeezed margins, it is unlikely retailers will be able to hold the flood on higher costs indefinitely," Martin said.
FOOD PRICES ALREADY RISING
Food prices have already begun to creep up after a long deflationary cycle due to pressure from discounters like Aldi and Lidl, with prices rising 1.4% in June and May, according to another survey last week.
Fresh food prices rose 1.4% in June, 0.2 percentage points higher than in May and the highest increase since February 2014, while ambient food inflation softened to 1.5% from the 1.8% increase in May.
Food prices are felt to be rising due to the depreciation of the pound and rising commodity prices.
As prevailing currency hedging by retailers eases out of the system, replaced with new positions at lower prevailing exchange rates against the US dollar in particular, the pressure upon supply chains will continue to build.