The fallout from a weak pound is beginning to hit consumers with price rises starting to be reflected in familiar brands and high street products.
The right-wing Brexit leaning press have predictably called the price-hikes cynical. But companies and manufacturers say they cannot swallow the increased costs any longer.
Tea prices set to soar
The right-wing Brexit leaning press have predictably called the price-hikes cynical. But companies and manufacturers say they cannot swallow the increased costs any longer.
Tea prices set to soar
For Somnath Saha, the chief executive of Typhoo Tea, the economics are simple and brutal. Typhoo Tea produces 125 million tea bags a week at its factory in Moreton, Wirral, which have just one ingredient - tea leaves, and they are imported.
Black tea is a global commodity. But like oil and many other commodities it is traded in dollars. Following the fall in sterling since the EU referendum, costs have soared for this renowned brand as 95% of its sales are in the UK.
"This is an absolute disaster for a company the size of ours," says Saha. "The very sharp fall in the pound means the impact is at least a quarter of a million pounds a month for us. This is having a very negative impact on our business and we are really suffering. It's now come to a point where it's not sustainable for us." [BBC]
Tea is not the only product that is increasing in price. Other well known brands have also seen price hikes. In the last week of October The Grocer magazine reported that Morrisons were charging £2.64 for a 250g jar of Marmite, an increase of 12.5%.
Prices for the same product varied at other supermarkets. According to supermarket websites, a 250g pot of Marmite cost £2.64 at Morrisons, £2.50 at Sainsbury's, £2.35 at both Waitrose and Tesco and was on special at Asda for £2.
Earlier in the month Tesco was embroiled in a row with Unilever over pricing. The dispute was soon resolved, but was exploited by the tabloid press who accused companies like Unilever of taking advantage of consumers and using the weak pound and Brexit as an excuse for price rises [BBC / Telegraph / Daily Mail].
The spat between Unilever, which produces some 3000 household products, has been dubbed Marmitegate and spawned many jokes often parodying the 'Marmite you either love it or hate it' catch phrase and replacing Marmite with Brexit.
But for consumers and shoppers it is no joke. The Grocer reported that both Tesco and Asda have raised prices on a number of Unilever products, and Morrisons has also increased the prices of other items made by the company.
Distribution costs rise
GDP up, but slowing
Brexit supporters still remain positive in the face of such increases and claim the the weak pound is good for exports. Britain's economy indeed appear to shrug off the uncertainty surrounding June's referendum vote to leave the European Union and maintained the best performance among the world's leading economies with growth of 0.5% in the three months since the poll.
However, the figures were marred by a contraction in agriculture, construction and manufacturing that prompted business groups to urge the chancellor, Philip Hammond, to use the autumn statement next month to support measures that boost investment and productivity. In fact, overall, GDP growth slowed from 0.7% in the previous quarter [BBC / Guardian].
It remains to be seen whether growth can be maintained in the coming months. The government has to maintain confidence in a manufacturing industry that fears a so-called hard Brexit which would see increased tariffs. Indeed while current figures are buoyant, a Grocer survey reveals grave misgivings, with some "terrified" by the government's approach.
Secret deals, risks & threats
Indeed it appears the government may be making deals and promises to keep the likes of Nissan on board and stop them fleeing to continental Europe, although No. 10 said there was "no cheque book" on the table [Guardian].
But Prime Minister Theresa May's deal to keep Nissan investing in Britain may well have opened the floodgates to demands from rival car companies chasing their own assurances from the government that they won't be hurt by Brexit [Reuters / Guardian]. The so-called 'sweetheart deal' could make things more complicated or political as Britain wrangles with what type of Brexit it wants [Guardian].
And where might it stop. Already banks are mulling over their position concerning a loss of passporting, which seems more than likely should the PM insist on controls on immigration and limits to free movement, something which is non-negotiable as far as the EU is concerned.
Recent reports suggested that some banks were likely to start shifting before Article 50 was invoked, given the apparent intransigence of the hardline stance of May and her government [Bloomberg].
While some have dismissed the 'threats', there was further concern for British finance after the ratings agency Standard and Poors said Britain's sovereign credit rating remained at risk of a further downgrade because of ongoing uncertainty about the country's future outside the European Union. Furthermore, S&P said Brexit threatened the pound's future as a reserve currency [Reuters / FT].
Of course such predictions will be dismissed by Brexiteers as yet more fearmongering from the Remain camp. However, month by month it is becoming clear that the decision to leave the EU is having negative effects on the economy.
The question is not whether the economy will slow and whether manufacturing will suffer, but how long before those who voted leave wake up from their state of denial and realise that a vote for Brexit was a vote for economic suicide and has allowed the Tory party to seize control with little or no challenge to its leadership.
tvnewswatch, London
Black tea is a global commodity. But like oil and many other commodities it is traded in dollars. Following the fall in sterling since the EU referendum, costs have soared for this renowned brand as 95% of its sales are in the UK.
"This is an absolute disaster for a company the size of ours," says Saha. "The very sharp fall in the pound means the impact is at least a quarter of a million pounds a month for us. This is having a very negative impact on our business and we are really suffering. It's now come to a point where it's not sustainable for us." [BBC]
Tea is not the only product that is increasing in price. Other well known brands have also seen price hikes. In the last week of October The Grocer magazine reported that Morrisons were charging £2.64 for a 250g jar of Marmite, an increase of 12.5%.
Prices for the same product varied at other supermarkets. According to supermarket websites, a 250g pot of Marmite cost £2.64 at Morrisons, £2.50 at Sainsbury's, £2.35 at both Waitrose and Tesco and was on special at Asda for £2.
Earlier in the month Tesco was embroiled in a row with Unilever over pricing. The dispute was soon resolved, but was exploited by the tabloid press who accused companies like Unilever of taking advantage of consumers and using the weak pound and Brexit as an excuse for price rises [BBC / Telegraph / Daily Mail].
The spat between Unilever, which produces some 3000 household products, has been dubbed Marmitegate and spawned many jokes often parodying the 'Marmite you either love it or hate it' catch phrase and replacing Marmite with Brexit.
But for consumers and shoppers it is no joke. The Grocer reported that both Tesco and Asda have raised prices on a number of Unilever products, and Morrisons has also increased the prices of other items made by the company.
Distribution costs rise
Britain imports a vast majority of products or the ingredients from which things are made and the weak pound is driving prices up. Even domestically produced items aren't immune since fuel prices will drive up distribution costs.
British motorists last month faced the highest road fuel costs this year as global oil prices continued to creep higher from historic lows. And with sterling now 18% lower the forecourt prices are steadily rising.
Rising prices for clothes, hotel rooms and petrol have led to the highest rate of inflation in nearly two years, official figures show. Inflation rose to 1.0% in September, up from 0.6% in August, the Office for National Statistics (ONS) said. Clothing saw its biggest price rise since 2010 and fuel, which was falling a year ago, was also more expensive [BBC].
British motorists last month faced the highest road fuel costs this year as global oil prices continued to creep higher from historic lows. And with sterling now 18% lower the forecourt prices are steadily rising.
Rising prices for clothes, hotel rooms and petrol have led to the highest rate of inflation in nearly two years, official figures show. Inflation rose to 1.0% in September, up from 0.6% in August, the Office for National Statistics (ONS) said. Clothing saw its biggest price rise since 2010 and fuel, which was falling a year ago, was also more expensive [BBC].
Fuel prices and a weak pound has also affected airlines with some seeing profits drop significantly [BBC]. Airline group IAG, the owner of British Airways and Iberia, said the fall in the value of sterling has cost it €162m [£145m] in the third quarter of the year.
GDP up, but slowing
Brexit supporters still remain positive in the face of such increases and claim the the weak pound is good for exports. Britain's economy indeed appear to shrug off the uncertainty surrounding June's referendum vote to leave the European Union and maintained the best performance among the world's leading economies with growth of 0.5% in the three months since the poll.
However, the figures were marred by a contraction in agriculture, construction and manufacturing that prompted business groups to urge the chancellor, Philip Hammond, to use the autumn statement next month to support measures that boost investment and productivity. In fact, overall, GDP growth slowed from 0.7% in the previous quarter [BBC / Guardian].
It remains to be seen whether growth can be maintained in the coming months. The government has to maintain confidence in a manufacturing industry that fears a so-called hard Brexit which would see increased tariffs. Indeed while current figures are buoyant, a Grocer survey reveals grave misgivings, with some "terrified" by the government's approach.
Secret deals, risks & threats
Indeed it appears the government may be making deals and promises to keep the likes of Nissan on board and stop them fleeing to continental Europe, although No. 10 said there was "no cheque book" on the table [Guardian].
But Prime Minister Theresa May's deal to keep Nissan investing in Britain may well have opened the floodgates to demands from rival car companies chasing their own assurances from the government that they won't be hurt by Brexit [Reuters / Guardian]. The so-called 'sweetheart deal' could make things more complicated or political as Britain wrangles with what type of Brexit it wants [Guardian].
And where might it stop. Already banks are mulling over their position concerning a loss of passporting, which seems more than likely should the PM insist on controls on immigration and limits to free movement, something which is non-negotiable as far as the EU is concerned.
Recent reports suggested that some banks were likely to start shifting before Article 50 was invoked, given the apparent intransigence of the hardline stance of May and her government [Bloomberg].
While some have dismissed the 'threats', there was further concern for British finance after the ratings agency Standard and Poors said Britain's sovereign credit rating remained at risk of a further downgrade because of ongoing uncertainty about the country's future outside the European Union. Furthermore, S&P said Brexit threatened the pound's future as a reserve currency [Reuters / FT].
Of course such predictions will be dismissed by Brexiteers as yet more fearmongering from the Remain camp. However, month by month it is becoming clear that the decision to leave the EU is having negative effects on the economy.
The question is not whether the economy will slow and whether manufacturing will suffer, but how long before those who voted leave wake up from their state of denial and realise that a vote for Brexit was a vote for economic suicide and has allowed the Tory party to seize control with little or no challenge to its leadership.
tvnewswatch, London
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