Brexit: UK hit by post-poll price rises
Published 11/08/2016 | 02:30
Consumers in the UK are starting to bear the costs of Brexit, with companies raising prices of everything from cars to carpets to counter a plunge in the pound caused by the UK's vote to leave the European Union.
French carmaker PSA Group lifted prices of its Peugeot, Citroen and DS vehicles by an average of 2pc on August 1, a spokeswoman said. The increases make up for part of the pound's 10pc drop against the euro and its 13pc fall versus the dollar since the June 23 referendum.
"We took a reasoned measure given the currency fluctuations," the spokeswoman said, confirming an earlier report that its Peugeot 308 hatchback rose by 2.8pc, or £435 (€508).
While some companies have stood firm on prices, worried about losing market share in competitive UK businesses like groceries, others are moving quickly to pass along the effects of the weaker pound.
The increases underline forecasts for an uptick in inflation after the country flirted with deflation last year.
Alan Clarke, an economist at Scotiabank Europe, said it was "unusual" for companies to blame the Brexit referendum for cost increases they passed along so quickly.
Typically there's a six to nine-month lag between big moves in exchange rates and shifts in consumer prices, Mr Clarke said.
"I think you'll have some opportunistic companies," he said. "Whether people actually buy those products or they get discounted at sale time, we'll have to wait and see." (Bloomberg)