White goods price war on the high street

A WHITE goods price war could hit the High Street this year as makers of dishwashers, fridges and washing machines come to terms with changes in the value of the pound.

Brands such as Siemens in Germany and Indesit in Italy are understood to be considering raising prices or asking retailers in the UK to pay in euros to cover the slide in the currency.

The pound is down around 10pc since the Brexit vote and is a tenth lower than at the start of the year.

Retailers in the UK, such as Argos, Dixons Carphone (which owns Currys), Ao World and John Lewis are in discussions with European manufacturers.

If prices rise it is expected retailers will pass this on to consumers, simply exacerbating the need to shop around for the best deal.

It could also prove a boost for UK suppliers such as Ao World, the online white goods trader. Yesterday, it said total UK sales grew 25pc in the three months to June 30 and overseas revenue increased 101pc.

The firm opened in Germany in 2014 and launched in the Netherlands in March, but does not have any direct exposure to the fall in the pound because it buys and sells its products in local currencies.

It warned that a hike in prices on white goods bought from European suppliers could force it to pass this increase on.

The company dismissed fears the referendum vote and uncertainty of Brexit had led to a dip in consumer confidence.

Bloomberg has reported that Brexit has already caused a number of companies to adjust pricing because of the drop in the pound. UK floor covering distributor Headlam Group said it would raise prices in August to cover the increased cost of importing carpets and other items.

Velvet tissues and Cushelle toilet paper maker Svenska Cellulosa said it was also considering raising prices of some of its products. Electrolux has already warned it expects a slowdown in demand for its appliances.

Analysts at Shore Capital said: ‘Given the majority of products are imported, cost inflation in pricing may be the result of consequent negotiations with the manufacturers given the recent weakness in sterling.’

Ao World said sales of its ownbranded products rose 29pc in the first quarter. Chief executive John Roberts said: ‘At the minute we haven’t seen any material sales impact that gives us any cause for concern.’

He said disposable incomes were still rising and the economic environment was very different from that of the financial crisis in 2008.

He added: ‘There is no credit crunch in all this. This is not 2008, where suddenly the pounds in peoples’ pockets completely dry up.’

Ao shares, which were hit last year by a profit warning, were up 9.8pc, or 13.2p to 147.6p.

Analysts at Numis said: ‘Ao is firmly back on the front foot in the UK, taking significant market share.’

At Ao’s annual general meeting more than 15pc of shareholders voted against its pay report.

Roberts was paid £588,164 and outgoing chairman Richard Rose received £137,264.