The Brexit blow to the pound coupled with commodity price hikes is squeezing Britons’ Christmas spending power this year.
A typical household spends an extra £500 in December but the pound’s dramatic tumble since the 23 June referendum means the festive fund is being stretched as the price of everything from Christmas puddings to selection boxes and the latest tech comes under pressure.
British firms are having to pay a lot more for imports, from food ingredients to fuel, with manufacturers’ costs up 13% over the last year – the steepest rise for five years. Some of those higher costs are already being passed on to consumers, and experts have warned households to expect a brisker pace of inflation next year.
“Generally the drivers of food inflation are what’s happening in global commodity markets and recent movements in sterling,” said the Retail Economics analyst Richard Lim. “This side of Christmas retailers are holding back some of the inflationary pressure they are feeling from suppliers and manufacturers because it is a fiercely competitive environment. Next year we expect food inflation to rise fairly steeply because of sterling.”
For now it seems importers and retailers are taking a hit to their own margins rather than choosing to charge more in the shops, but according to the Guardian’s analysis Christmas will give shoppers a taste of higher inflation ahead.
Not everything is more expensive – official figures show food prices in shops are still lower overall than a year ago. A supermarket price war and the rise of discounters such as Lidl and Aldi have helped keep grocery prices low. There is also good news for those who like a Christmas tipple. Wine, beer and spirits are all cheaper than a year ago.
But shoppers should beware of hidden inflation. Manufacturers have been shrinking their products and charging the same price. In other words, you pay the same but get less – a phenomenon known as shrinkflation. A recent example was the storm over the new Toblerone, which has bigger gaps between its chunky chocolate peaks after its manufacturer decided to cut the bar’s weight rather than increase its price.
The rising cost of Christmas
Christmas pudding: +21% compared with December 2015
Stir-up Sunday got a lot more expensive this year as raisins, butter and flour all increased in price.
Artificial trees: +46% increase in steel price
You get more than one Christmas out of them but the price of artificial trees is being affected by a 46% increase in European steel prices after China slashed production.
Christmas jumper: +0.9%
Official figures showed clothing prices this November were up almost 1% from a year ago, making them one of the main factors behind a rise in the UK’s overall inflation rate to 1.2%.
Nip of whisky: +4%
While the headline price of spirits is down about 2% from a year ago, according to the Office for National Statistics, a breakdown of the official figures shows whisky has been getting pricier. A nip will cost you £2.73 this year, up from £2.62 a year ago.
Pigs in blankets: +21%
Analysts are reporting a 21% rise in the wholesale price of pork, with the surge expected to push up the price of bacon and sausages sold in supermarkets.
Toblerone: +13% per bite
Chocolate prices would be higher if the bars weren’t getting smaller as manufacturers shrink pack sizes rather than raise prices. Mondelēz International reduced the size of the 170g Toblerone bars to 150g – equating to a 13% rise in the price per gram.
The Brexit vote has pushed up the prices of laptops, desktop computers and tablets as technology companies seek to adjust to the weaker pound. Apple has hiked the prices of its products in the UK, including Christmas list favourite the iPad. Price rises in September, for example, pushed up the 9.7-inch model of the iPad Pro to £549 from £499.
The Furby Connect has a recommended retail price of £99.99 versus the older Boom version’s £69.99 price tag. However, the Furby Connect is a jazzed up version of the furry critter with a Bluetooth connection and coloured LED eyes – and most retailers are discounting the toy anyway.
Lump of coal: +2%
A lump of coal in the Christmas stocking is now a more expensive way to scold a naughty child. A 50kg sack of coal now costs £17.62, 29p more than a year ago
This article was written by Zoe Wood and Katie Allen, for theguardian.com on Saturday 17th December 2016 08.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010