Food bills to soar by £8 BILLION

Families face paying £300 more a year as stores are hit by collapse of sterling

BRITISH shoppers are faced with price hikes on groceries adding up to as much as £8billion over the next 12 months as a result of the pound tumbling in value against other currencies following the Brexit vote.

That means individual households could have to spend £300 more a year in supermarkets.

Directly imported goods will be worst hit, such as wine, meat and chicken, seasonal fruit – which is often imported from Europe, Africa or the Middle East – and specialist products from Europe.

Among the worst affected are parmesan cheese – expected to go up by 15 per cent – while the price of both olive oil and coffee will soar by 20 per cent, as will sugar. Wine and chocolate are both set to rise by 5 per cent.

David Sables, chief executive at Sentinel Management Consultants, which advises retail suppliers in their negotiation with supermarkets, said. ‘Prices will go up across the board. I am hearing 5 per cent.’

That figure was backed by a raft of senior industry figures. One top supermarket executive, who preferred not to be named, also said he expected a 5 per cent hike in prices. And industry veteran Lord Haskins, former chairman of Northern Foods, makers of Goodfella’s Pizza and other popular products, agreed. ‘That [5 per cent] is certainly the figure I am thinking we will see,’ he said.

With total retail spending in the UK at about £300 billion, a 5 per cent rise means shoppers will be faced with a £15 billion rise in bills. Just over half of that – £8 billion – is food and other day-to-day groceries – a rise of £300 per household.

More than half the products sold in UK stores are imported, which means that the 16 per cent drop in the value of the pound this year will hit retailers with direct cost rises of at least 8 per cent.

Shoppers will inevitably face price rises on virtually all goods. Imported items will cost more, but so will things manufactured in the UK – thanks to the rising price of commodities such as petrol and raw ingredients, experts have warned.

The effect of the plummeting pound was already being felt last week, as Tesco dropped items produced by Unilever after it raised prices, leaving shelves empty of big brands such as Marmite and Pot Noodle snacks.

Tesco says the dispute is now resolved, although last night many items had yet to be restored to the shelves.

One high street clothing chief said Far East suppliers are already demanding 10 per cent price rises to compensate for the falling pound.

One supermarket executive said: ‘Everyone will have to take their share of the pain – suppliers, retailers and customers. Half of the increase will be passed on but some say we need to pass on 100 per cent.

‘Commodity prices and basic ingredients fluctuate and global demand affects prices in ways we can’t predict. But in the round prices are going up.’

Sterling is the worst performing currency in the world this year amid concerns there is no clear contingency plan following the referendum.

Shoppers are expected to trim spending or switch to cheaper brands as inflation grips. But sources said manufacturers shrinking pack sizes or switching to cheaper ingredients, and job losses at both retailers and suppliers, are likely.