The pound’s fall since a referendum vote decided Britain will leave the European Union has left suppliers and supermarkets battling for profits as imported goods become more expensive.
Tesco’s boss Dave Lewis said: “Since the referendum we have not increased prices. Since the referendum, actually, our prices have continued to go down. I can’t tell you what the exchange rate will do to the supply base going forward, it depends on the level. What I can give you as a commitment is, it’s not our intention to let prices flow through to retail inflation if it is at all avoidable.”
Unilever, one of the world’s biggest consumer goods producers, had reportedly demanded price increases of 10 percent across a wide range of goods.
Unilever’s products include Persil washing powder, Ben & Jerry’s ice cream and Marmite, a brown yeast-extract spread which is among Britain’s best loved brands.
One shopper outside a London Tesco store didn’t see a connection with Brexit: “If prices go up it’s going to be very difficult for people who are at the low end in terms of earnings. It’s bad enough as it is and Unilever are saying it’s something to do with us coming out of Europe but I don’t see how it can be anything to do with that really.”
But another shopper placed the blame firmly on the those who voted to leave the EU: “I think people didn’t really understand what they were voting for when they were voting for Brexit. They were voting for other reasons and they just didn’t consider the economic repercussions; so now why is it a surprise?”
Tesco’s boss Dave Lewis – who ironically was previously a senior executive at Unilever – pointed out some of the items involved – such as Marmite – are made in Britain.
Unilever argued the price increases were part of “a normal devaluation led cycle” adding they were “substantially less” than what’s needed to cover the impact on its profits.
In the end the two companies were able to hammer out a compromise.
The pound is down 19 percent against the US dollar and about 16 percent against the euro since the Brexit vote.
The average price for a basket of 35 commonly bought goods cost 83.19 pounds (92.04 euros) in September, according to price tracker mySupermarket.co.uk, up 57 pence from May, the month before the vote.
On Thursday Tesco’s share price fell by 3.03 percent, Unilever was down by 3.4 percent. (Euronews)