Brexit: UK Supermarkets set to shrink packets and use cheaper ingredients due to pound weakness, says Bank of England
Earlier this year, a study by consumer group “Which?”, found that the products on supermarkets shelves are getting smaller but prices are not.
Wednesday, August 29, 2018
Toilet rolls, chocolate biscuits and orange juice were among the products that have shrunk in size, meaning customers are paying more for less.
“Shrinking products can be a sneaky way of increasing prices. We want manufacturers and supermarkets to be upfront so consumers aren’t misled,” Richard Headland Which? editor said.
Supermarkets are planning to reduce packaging sizes and use less expensive ingredients to save money, following UK’s vote to leave the EU.
Sterling plummeted 10 per cent following the EU referendum in June, pushing up the prices of imported ingredients, according to the Bank of England.
The Bank of England has warned shoppers that some food retailers were “re-enginnering” products in an effort to maintain prices at pre-Brexit level to keep their “highly price-sensitive” customers happy.
"Retailers were very cautious about any increases in prices, given that consumers remained highly price sensitive, and so the extent and timing of pass?through would largely depend on competitors’ actions, particularly in food retail," the Bank of England said in its survey of business conditions.
"Some food retailers were re?engineering products to maintain existing prices. In non?food goods, some retailers were starting to increase prices in response to rising material costs, particularly for products sourced in US dollars, but the impact was expected to be seen more fully through 2017," it added.
Consumer groups have previously warned that retailers have been shrinking product sizes to keep prices low or increase margin profits.