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Retailers Hike Prices by £10 Billion
Listed under: News
Published: Monday, June 15, 2009
Shop owners could be forced to increase their prices by as much as £10 billion over the next year due to the rapidly declining value of the pound against the dollar and euro, according to recent research from leading professional advisory firm PricewaterhouseCoopers (PwC).
The findings – which suggest any further price rises could see consumer confidence drop to an all time low – reveal retailers will be forced to choose between absorbing the costs themselves or passing them on to their customers. The biggest increase is expected to be in the value of imported goods, particularly those from areas in Asia where the dollar dominates.
Last week, retail giant Argos confirmed the findings, admitting the falling value of the pound could add as much as ten percent to its sourcing costs over the next year alone, resulting in significant price rises across its range.
Commenting on the report, Mark Hudson, retail leader at PwC, says, "When UK consumers are watching their spending closely and confidence appears to be improving, the last thing shoppers need is price rises. Since retailers' margins are so tight, these extra costs will potentially spill over into the prices customers are asked to pay and we may see the return of inflation in the non-food sector.”
However, Debbie Griffiths from craft shop Emeralds Art and Craft Supplies in Powys, is less gloomy about the situation. “While some of our wholesalers have confirmed they will be taking their prices up over the next 12 months due to the falling value of the pound and associated import costs, we haven't had to increase ours yet,” she says. “At the moment, the VAT changes seem to be covering us quite nicely and the craft sector doesn't appear to have been drastically hit. Whilst I wouldn't say we're particularly better off now than we were this time last year, I certainly don't think things are any worse either.”
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The findings – which suggest any further price rises could see consumer confidence drop to an all time low – reveal retailers will be forced to choose between absorbing the costs themselves or passing them on to their customers. The biggest increase is expected to be in the value of imported goods, particularly those from areas in Asia where the dollar dominates.
Last week, retail giant Argos confirmed the findings, admitting the falling value of the pound could add as much as ten percent to its sourcing costs over the next year alone, resulting in significant price rises across its range.
Commenting on the report, Mark Hudson, retail leader at PwC, says, "When UK consumers are watching their spending closely and confidence appears to be improving, the last thing shoppers need is price rises. Since retailers' margins are so tight, these extra costs will potentially spill over into the prices customers are asked to pay and we may see the return of inflation in the non-food sector.”
However, Debbie Griffiths from craft shop Emeralds Art and Craft Supplies in Powys, is less gloomy about the situation. “While some of our wholesalers have confirmed they will be taking their prices up over the next 12 months due to the falling value of the pound and associated import costs, we haven't had to increase ours yet,” she says. “At the moment, the VAT changes seem to be covering us quite nicely and the craft sector doesn't appear to have been drastically hit. Whilst I wouldn't say we're particularly better off now than we were this time last year, I certainly don't think things are any worse either.”
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