Tesco said this week it would be willing to consider increasing shelf prices in the face of the currency crisis – but it also warned it may have to change suppliers.
“We are managing the issue, but if it becomes a permanent phenomenon you may see a change in the countries we source from in Europe, whether inside or outside the Eurozone,” said corporate affairs director Lucy Neville-Rolfe.
Major UK suppliers said they had felt the effects of weak sterling but were confident they could recoup the cost. Northern Foods CEO Stefan Barden said currency accounted for a £4m impact on the business, but felt he could recover the hit from the weak pound either through cost savings or retail prices.
Premier Foods CEO Robert Schofield said a fifth of its £1.3bn spend on ingredients was bought in foreign currencies. He estimated food price inflation at 5% to 6% in 2009, but said this still did not account for the current weak sterling.
“Inherently, if sterling stays where it is it will have an inflationary impact,” he said. “It hasn’t hit us yet but we’re keeping our eye on it. Given we managed to pass on last year’s much-higher inflation I’m confident we could do so again if necessary.”