The weak pound: six things that are going to cost more
Here's a round-up of the prices that have or are going up thanks to the fall in the value of the pound.
More and more prices are going up thanks to the fall in the value of the pound following the EU referendum.
The value of sterling has plummeted compared to the euro and dollar since the UK’s shock decision to Brexit.
Since June 23 sterling has fallen from 1.4707 to 1.2154 against the dollar (17%) and from 1.3048 to 1.112 (15%) against the euro. The decline means the pound has earnt the title of the world’s worst-performing currency this month, trailing behind 150 others, according to Bloomberg.
The currency fluctuation makes importing things more expensive and can impact company profits.
Here’s a round-up of six products and services that are going to be affected.
Petrol
The cost of petrol is likely to rocket by up to 5p a litre this month.
Crude oil prices have been steadily rising and given that it is also traded in dollars, prices at the pumps will have to go up.
The Petrol Retailers Association (PRA), which represents independent fuel retailers in the UK, says the rising cost will be passed onto motorists in the coming weeks.
“The double impact of the pound weakening against the dollar and global oil prices strengthening will cause pump prices to move sharply upwards,“ says PRA chairman Brian Madderson.
“Thus motorists can expect increases of up to 4 or 5p per litre by the end of the month, unless there are favourable corrections to the exchange rate and to global oil prices."
Read How to find cheaper diesel and petrol for ideas on how to beat the rising cost.
Apple Mac computers
Apple has increased the cost of its laptops and desktop computers in the UK thanks to the slump in the pound.
Last week the tech giant unveiled a range of new Macbook Pro laptops, with prices that match the US following currency conversion and addition of UK VAT.
At the same time the company also hiked the cost of its older range.
The Apple Mac Pro desktop computer, last updated in December 2013, now costs £2,999, up from £2,499 – a £500 hike.
Apple's least expensive laptop – the 13-inch Macbook Air, last updated in March 2015 – now costs £949, up from £849.
Microsoft services
Microsoft has also announced UK price increases, but only for commercial customers.
Earlier this month the firm said some business service prices would have to rise by up to 22% in 2017, to ‘harmonise’ its prices across Europe following the pound’s weakened value against the euro.
Microsoft is one of the biggest sellers of business software in the UK. From next year Microsoft enterprise customers will see prices rise 13% for computer software and 22% for online cloud service.
The price rises will only apply to new purchases rather than existing contracts and Microsoft has confirmed that retail customers will not be impacted.
Marmite
Morrisons has hiked the cost of a jar of Marmite by 12.5%, with a 250g jar now on sale for £2.64.
A Morrisons spokesman said: "Sometimes we have to increase prices as a result of costs rising."
Unilever, which produces Marmite and other popular household goods, hit the headlines earlier this month when it was revealed it was trying to get Tesco to increase prices by 10%.
The dispute spilled into the public domain when it was revealed Tesco was resisting the price hike and as a result stocks of products like Marmite was running low in its stores and online.
It seems Morrisons has succumbed to the demands but other supermarkets haven’t budged on their prices just yet. A 250g pot costs £2.50 at Sainsbury’s, £2.35 at Waitrose and Tesco and is actually on special offer at Asda for £2.
However, despite the store publicly battling Unilever, Tesco Chairman John Allan has warned supermarket price rises at Tesco are inevitable, though they are likely to be closer to 3%. For more on this, read Tesco: supermarket prices will rise.
Typhoo tea
The cost of a cup of tea is also set to rise.
Typhoo Tea, which produces 125 million tea bags a week at its factory in Moreton on the Wirral, imports its key ingredient: tea leaves.
Black tea is traded in dollars, so the plummeting value of the pound since the Brexit vote has impacted the company in a big way.
At the beginning of the year a typical 80kg bag of black tea could be bought for £90 to £100 but now the same bag costs £120 to £150.
Typhoo Tea Chief Executive Somnath Saha told the BBC: "The very sharp fall in the pound means the impact is at least a quarter of a million pounds a month for us.
"We don't have big enough margins between us and retailers to absorb all these costs. We're looking at how to mitigate some of them, from our labour, overheads and marketing costs, which will affect the growth of the business and employment in long run. But some of these currency costs will have to be passed on, as neither us nor the retailers can absorb any more cost increases."
Carpets and flooring
The cost of carpets and flooring may also rise.
Carpetright’s chief executive Wilf Walsh has warned more prices could go up, following a drop in like-for-like sales of 2.9% in the first half of the year.
The company imports much of its material from Europe, so the weakened pound is compounding this problem.
Prices at the store have already gone up 8% since the referendum but Walsh warned last week that further increases are on the way.
"The price increases and inflation hitting our sector will hit everyone in our sector because we all buy from Europe," Walsh said.
"We've left our essential value range untouched, but we're going to have to keep an eye on the exchange rates. We're also going to be looking at alternative supply in the UK and in Turkey."
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