Irish retailers fear Unilever row is first of many as plunge in sterling starts to bite
Irish customers and retailers should brace themselves for more upward pressure on prices amid sterling's plunge, the head of Ibec's retail representative body has warned.
Unilever - the giant behind brands including Domestos, Hellmann's and Pot Noodle - made headlines this week after it sought to raise prices for some products in Musgrave stores.
A similar row took place between Tesco and Unilever but has since been resolved.
Thomas Burke, director of Ibec's Retail Ireland, said retailers "are going to see a little bit of pressure coming from Uk-based suppliers who have seen an increased cost base".
"There's going to be an element of tension, I'd imagine. All of these deals will be negotiated at an individual level, various suppliers and retailers will have to thrash that out between them.
"Our members are looking to see what they can do in terms of price for consumers over the coming weeks and months, and that'll be looking for downward pressure on prices as opposed to increases."
The fall in sterling has seen the cost of importing raw materials into Britain for manufacturing rise.
A retail sector source, who did not wish to be named for fear of upsetting relationships with major suppliers, said a number of suppliers had been making price increase requests since sterling's precipitous fall started.
The source said that, despite an expectation that prices would fall as sterling falls, Irish consumers would be lucky if current pricing endures. Earlier this week Michael Kilcoyne, the deputy chairman of the Consumers' Association, said prices should be falling sharply.
"We import a huge amount from the UK, which means prices should be falling in supermarkets and other shops. Instead they are using this to increase profits and not passing on the benefits of weaker sterling to consumers," Kilcoyne said.
Burke said that customers have been telling retailers that they want prices to fall, but that Retail Ireland members were finding it difficult to pass on price falls immediately because of currency hedging.
"I've been speaking to retailers over recent days who would source product out of the UK, and what they tell me is that most of them are hedged out to January... so they have bought their sterling in order to do the transaction with the supplier in the UK at a significantly different rate than today."
Sunday Indo Business