Unilever Price Rises Herald Brexit Pain for British Consumers - The decline in sterling is pushing up prices and threatening the purchasing power of British households
Consumer-products giant Unilever PLC is raising its U.K. prices for everything from mayonnaise to shampoo after months of more-discreet increases amid a Brexit-triggered currency rout that is threatening Britons’ buying power.
Unilever is asking its top grocery retailers here for price increases of 10% on average, according to people familiar with the matter.
That demand set the stage for a brief public standoff with Tesco PLC, Britain’s biggest grocer. Tesco, which also is one of the world’s largest retailers, on Wednesday began removing Unilever brands from its website after refusing to accept the higher prices.
Late Thursday, Unilever said “the supply situation with Tesco in the U.K. and Ireland has now been successfully resolved.” It gave no details. Unilever confirmed on Thursday it has asked most of its sellers to pay higher prices for brands such as Hellmann’s mayonnaise, Dove soap and Ben & Jerry’s ice cream. It also makes Marmite, a popular spread. It cited rising commodity costs in dollars, which—coupled with the sharp decline in the pound—have raised the cost of imported ingredients. The Anglo-Dutch company, the world’s second-largest consumer goods maker after Procter & Gamble Co., didn’t detail its pricing demands.
“The price increases have landed,” said Unilever finance chief Graeme Pitkethly on a call with analysts on Thursday.Comment: Still best in the long run! Short term (5+ years?) pain ... long term gain in liberty! Image snap from source. Tesco image from Forbes article .
Also see British Panic Over Marmite Shows Brexit Just Got Real:
The pound’s drop is already hitting the costing of foreign goods, and some of the country’s biggest stores have warned of looming price hikes. Import prices are increasing at the fastest pace in five years as energy costs rise and sterling’s drop makes everything priced in foreign currencies more expensive.
Almost every economist agrees that the inflation rate is going higher. Economists surveyed by Bloomberg see it averaging 2.2% in 2017, about three times the rate forecast for this year and above the Bank of England’s 2% target. While that’s not a disaster (inflation hit 5% in 2011), if wage growth doesn’t also pick up from its current 2.1% pace, that means a squeeze on wallets.