The British Retail Consortium has warned that customers in the UK will face major price hikes if a Brexit deal is not reached.
Revealing an increase in British shop prices for the first time in more than five years, the BRC has said prices can continue to rise depending on the UK’s withdrawal from the EU.
The August increase broke a 63-month streak of deflation as food inflation increase to 1.9 percent.
According to the BRC, the increase seen in August was due to the heat wave is seen in the UK over recent months, which led to a decrease in production and increases in the prices of oil and agricultural products.
BRC’s chief executive, Helen Dickinson, said: “Despite significant increases in costs in the supply chain, this month’s figures show that retailers are keeping price increases faced by consumers to a minimum.”
“Current inflationary pressures pale in comparison to potential increases in costs retailers will face in the event the we leave the EU without a deal. If that does happen retailers will not be able to shield consumers from price increases.”
Dickinson added that whilst the weather was seen to have significant impacts on British retail prices, the event of a no-deal Brexit could have a “severe, quick and significant” impact on prices.
One such severe example is the possibility of the cost of importing cheddar from Ireland rising by 44 percent overnight.
“The EU and UK negotiating teams must deliver a withdrawal agreement in the coming weeks to avoid the severe consequences that would result from such a cliff edge scenario next March,” she added.
A report by the London School of Economics released in July found that everyday dairy products including butter and yoghurt could become luxury items in Britain following Brexit.
“Our dependence on imported dairy products means that disruption to the supply chain will have a big impact. Most likely we would see shortages of products and a sharp rise in prices, turning everyday staples like butter, yoghurts, cheese and infant formula, into occasional luxuries. Speciality cheeses, where there are currently limited options for production, may become very scarce,” said Ash Amirahmadi, the UK managing director of Arla Foods.
