Brexit Debate

Brexit fears driving up food and drink prices

Summer salad prices are rising over fears of a Brexit

Market fears over the UK’s potential exit from Europe are driving up food and drink costs, warns buying specialist Lynx Purchasing.

Fresh produce costs have been increasing as uncertainty in the City over the outcome of the referendum on June 23 has seen sterling fall in value against both the euro and the dollar, the specialist said.

The newly-published Summer 2016 edition of the Lynx Purchasing Market Forecast showed a range of factors linked to the European debate combining to put upward pressure on prices.

It said that suppliers were facing the challenge of the weakening of sterling that has hit the price of imports both from Europe and further afield.

Summer salad prices

The report highlighted imports including summer salad produce such as tomatoes, lettuce and cucumbers, which were mainly imported from Europe, as well as pork, as UK production declines. 

Key commodities such as coffee and bananas are traded in dollars, also pushing up the prices.

The availability and cost of labour and the introduction of the National Living Wage in April have already increased labour costs, the report said.

Lynx Purchasing also found that food producers relied heavily on migrant labour from the EU for seasonal work such as picking and packing. The producers were worried about the longer term availability of these workers and the effect on their costs in the event Britain leaves.

Higher fuel prices

Higher prices for fuel are also being paid by UK companies shipping from Europe, along with increased costs due to the migrant crisis. Lynx said that hauliers had significantly increased the charges per pallet year-on-year to cover increased insurance costs.

Rachel Dobson, Lynx Purchasing md, said: “Both the City and the supply chain thrive on certainty. There are clearly very strong views in both camps as to whether Brexit would be good for the UK in the long-term, but there’s no doubt that the extended debate before the referendum is having an impact.

“Prices are building back up again from a low base, which gives operators time to plan. However, we expect a return to inflation later in the year regardless of the outcome of the referendum, and we advise all operators to look carefully at their costs.”

Other challenges set out in the Summer 2016 Market Forecast included strong demand for the most popular meat cuts during the peak barbecue season, as well as continuing higher prices for avocados, as producers struggled to keep up with booming global demand for Mexican dishes on menus.

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