Brexit impact

Brexit could result in ‘stable food prices’ but views differ

Supermarket prices could remain stable after Brexit, said Gherardo Girard

Food prices could remain low fuelled by intense competition by retailers despite Brexit, a leading economist has claimed.

Gherardo Girardi, an economist from London Metropolitan University, believes the Brexit factor would be felt at the micro level of the economy. 

“At a micro level, intense competition between retailers was likely to continue keeping the pressure on prices to stay low,” he said.

But he acknowledged: “This effect may be offset to some extent by the reduced availability of labour at low wages coming from EU countries.”

Girardi said that “all eyes” would be on the cost of production.

“Prices, in my view, will be a function of these much more than a function of demand,” he added.

Food price impact

His comments contrasted sharply with other views expressed this week.

Kantar Worldpanel head of retail and consumer insight Fraser McKevitt predicted the UK’s decision to leave the UK could lift food prices.

“With an estimated 40% of the food we consume sourced from overseas, any long-term change in exchange rates may threaten the current period of cheaper groceries,” said McKevitt.

National Farmers Union (NFU) president Meurig Raymond also expected food prices to increase, due to the depreciation of sterling.

“Sadly, we only produce 60% of the food we consume, we’ve seen our self sufficiency fall dramatically, so we are very dependent on imported food,” he said in an interview with The Guardian.

“A weaker pound will mean higher imported food value,” he said.

The NFU boss has written to EU commissioner Phil Hogan for assurances that farm support schemes currently available to UK farmers remain open and in place until 2020.

He also called on environment secretary Liz Truss to help deliver a new domestic agricultural policy that worked for farmers, consumers and the economy.

‘Food and farming is of strategic importance to the country’

“Food and farming is of strategic importance to the country,” said Raymond.

“I have stressed to the secretary of state that the NFU is ready and willing to work with government to ensure we have a profitable, productive and competitive farming industry. That work must start now.”

Meanwhile, the British Retail Consortium ceo Helen Dickinson said that keeping costs down should be a priority for the government.

“In order to keep prices down and to deliver the best possible choice for consumers, retailers’ top priority in the short term will be to ensure the continued ease and minimum additional costs of importing EU goods into the UK for sale to customers,” she said.

However, Michael Thornton, partner and head of manufacturing at RSM, admitted there were many challenges for the manufacturing sector but said it was a “golden opportunity”.

“Brexit means that the UK should no longer need to comply with state aid rules meaning that government can implement grant funding mechanisms that get to the heart of current structural issues surrounding the funding of innovation,” he said.

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