As it happens, a large proportion of Unilever's products are also manufactured in the UK, sourcing at least a reasonable proportion of their ingredients from the UK, so as Tesco is pointing out, it's questionable whether a cross the board 10% increase is justified.
The pound has fallen by a
lot more than 10% over the last year (remember, it's not just post-referendum. It had been slowly falling over the previous year, which most analysts seem to believe was a result of the uncertainty caused by the upcoming referendum). So if a firm was responding to a proportion of its costs coming from outside the UK, and a proportion from in the UK, then 10% as an overall increase might well be reasonable. Remember, even if food is grown in the UK, it's possible that equipment or admin costs etc. may come from outside the UK.
Why all the scaremongering by these big Companies?
Probably because it matches reality. If the pound falls, then your costs measured in pounds rises, and basic maths says that if you don't raise prices to match, you're going to be losing money (unless your profits were previously so huge that they could absorb the exchange rate change, but that seems unlikely for most firms. The pound has fallen by something like 20-30% over the last year. Companies don't generally have profit margins
that big).
1) The exchange rate has been far worse in years gone by, no one seemed worried then !
You'd have to go back a looong time to see our exchange rate so bad against not just one currency (the Euro) but the aggregate of world currencies.
2) We are in the EU for at least another 2.5 years or more !
I recall going on holiday to europe about 6 or 7 years ago, it was 1.09 to the pound then, but no one seemed worried, they reckoned it would recover 'over the next few months' although it never did ever get back to previous levels.
But this time - as far as I can tell - analysts are not expecting the pound to recover significantly soon.
)
hock:
