Shoppers face hike in weekly shop after Brexit
SHOPPERS are facing a €19 hike in the cost of their weekly supermarket spend as prices will shoot up in the event of a no-deal Brexit.
The price of everyday necessities including bread, milk, cheese and eggs imported from the UK will soar by up to 46pc in a worst-case scenario.
A two litre carton of milk would surge from €1.70 to €2.48, while a large white sliced pan is estimated to increase from €1.28 to €1.66 if tariffs and costly customs checks are imposed in the event of a hard Border.
A basket of goods compiled by the Irish Independent that includes a variety of common household items currently costs €115.62.
But it would rise to €134.92 – €19.30 higher – for a shopper who buys a lot of British goods, if supermarket chains and shops are hit by big tariffs.
A pack of 20 cigarettes imported from Britain would rise from €12.05 to €12.29, a pint of lager from €4.93 to €4.98, and ground coffee from €4.99 to €5.99.
The prices are based on an Economic and Social Research Institute (ESRI) study that predicts a 30pc hike in the cost of bread and cereal.
It also forecasts a 24pc rise in the price of meat and a massive 46pc hike in milk, cheese and egg prices if the UK has to fall back on World Trade Organisation tariffs.
Sugar, jam and chocolate would rise by 27pc, fish and seafood by 17pc, and vegetables by 5pc.
Bord Bia overseas trade manager Shane Hamill said prices may rise “as a result of complexities in the supply chain”.
He said these may include customs compliance and tariffs, but said Irish manufacturers are taking action.
Companies could reformulate products by including new, cheaper ingredients or changing the size of a product but keeping the price the same, in order maintain current prices, he said.
Co-author of the ESRI study Professor Edgar Morgenroth predicted that Irish consumers will feel the full force of food and drink price hikes in the immediate aftermath of a no-deal Brexit.
He said those shopping at supermarkets with a greater share of UK-made products would be most affected compared with those that import less from the UK.
“Initially, the consumer will take a hit and gradually that will improve as we move and reinstate trade patterns,” he said.
“Over time, the supply chain will adjust and people will get used to other products that might not come from the UK that might be cheaper.
‘People will take a hit but that will improve as the supply chain adjusts’
“But initially, we don’t have those.”
However, Prof Morgenroth said this situation could create opportunities for Irish and other EU firms to replace UK wholesalers and producers.
“It looks to me that we could easily end up with a no-deal Brexit,” he said.
“It’s a stupid place to be. I don’t think we should be in such a situation. It’s down to the British government not getting its act together. It accepted the backstop in December, but continues to insist on a stance that is incompatible with it.
“It is talking out of both sides of its mouth.”
He said poorer households would be most affected as they spend more on the type of goods that would be affected by a hard Brexit.
Mr Hamill said there is currently no indication of what tariff codes the UK government may charge on food and drink imports from the EU in the event there is no Withdrawal Agreement between the UK and the EU.
He said Irish food and drinks manufacturers are ahead of the curve in responding to this danger and are preparing for a hard Brexit.
Bord Bia’s Brexit barometer survey shows most are confident about managing customs processes, he said, while 32pc have assessed the potential impact on sales to the UK.
“British retailers are lobbying hard through the British Retail Consortium to maintain as much of the current trading relationship as possible,” he Mr Hamill.
He said 79pc of its members’ food imports are from the EU and retailers want to maintain the prices and quality of food UK consumers have become accustomed to.