Weak pound to put petrol and supermarket prices up
The Brexit is playing havoc with the pound, and thanks to it currently being so weak, we could see prices going up on essentials, like petrol and everything at the supermarket.
Retail analysts have said that supermarket are likely to go up if things carry on like this. They've said that around 40% of food consumed in the UK is imported, and that means "any long term change in exchange rates may threaten the current period of cheaper groceries."
That's according to Kantar Worldpanel. Joining in is Ocado, who said that the weaker pound could lead to "inflationary pressure".
This follows a like-for-like grocery price drop, down 1.4% in the 12 weeks to 19 June when compared with a year earlier.
Kantar's Fraser McKevitt, said: "The immediate economic uncertainty is unlikely to cause a substantial fall in grocery volumes, as demonstrated by the 2008 financial crisis when basic food, drinks and household sales proved resilient."
"Historically, higher prices have led to consumers looking for less expensive alternatives such as own-label products, seeking out brands on promotion or visiting cheaper retailers."
This is more good news for Lidl and Aldi then.
Ocado's chief executive Tim Steiner added: "Currency weakness may bring some inflationary pressure in the food market, which wouldn't be such a bad thing given the deflation we've seen."
So retailers stand to make more money, but the discount supermarkets from Germany stand to do the best out of the whole thing.
As for fuel, it looks like petrol prices could go up by (up to) 3p a litre, thanks to the pound getting hammered against the dollar.
Within a week, the cost of unleaded is looking like it'll go from an average 111.78p a litre, up to 114.78p a litre. Diesel, now around 111.98p, is looking like it'll cost 114.98p.
The RAC's Fuel Watch spokesman Pete Williams, said: “We were anticipating a drop in prices at the pump of just over one pence on unleaded and two pence on diesel as wholesale prices had dropped."
“However, while we have seen a significant drop in the price of a barrel, the fall in the value of the pound against the dollar is likely to make the wholesale cost to UK retailers higher, meaning a price rise of around 2p per litre is likely in the next week."
TOPICS: High Street News