New analysis by the BRC spells out the potential cost to shoppers of leaving the EU without a tariff-free trade deal.

Over three quarters of the food that the UK imports comes from the EU and without reaching an agreement on trade, most of these goods will be subject to new tariffs. As a result, the average cost of food imported by retailers from the EU would increase by 22 per cent [1].

Further analysis, based on the proportion of European food retailers sell and the impact of new tariffs demonstrates how much typical products could be affected. The impact will be considerable if UK producers react to higher import prices and push their prices up to align with foreign products.

For consumers, new tariffs will mean higher prices. The BRC has estimated potential price increases for a number of everyday food items, should goods from the EU face WTO tariffs. The price of cheese for instance could rise by more than 30 per cent, or for tomatoes nearly 20 per cent [2].

Andrew Opie, Director of Food Policy at the British Retail Consortium said:

“Price increases of this scale to everyday food items will add a huge burden to hard pressed consumers whose finances are already under increasing strain from inflationary pressures.

“Even at the lower end of the risk, price rises of five to nine per cent dwarf the increase from inflation that shoppers are currently paying on food goods [3].  And the tariffs are particularly high on meat and dairy products, meaning that products such as beef and cheese would be hardest hit.

“With consumers’ buying habits being dictated ever more by a shrinking pool of discretionary spend, there’s no doubt that they will find an additional hit of this magnitude to their weekly food bills extremely hard to swallow.

“There will be opportunities from new trade deals in the medium to long term, but there’s a pressing need to avoid a cliff-edge situation on Brexit day. This is why the priority for the UK Government has to be securing the continuity of free trade with Europe from March 2019 and thereby delivering a fair Brexit for consumers.”

Aodhán Connolly, Director of the Northern Ireland Retail Consortium added:

“These are stark findings and show that Northern Ireland households potentially face a leap in prices for everyday essentials like meat, cheese and vegetables if the UK doesn’t secure a lasting tariff-free trade deal with the EU after Brexit. What makes matters worse is that Northern Ireland already has half the discretionary household income of our counterparts in Great Britain so the impact of any price rise will be magnified here leading to further hardship for the Northern Ireland consumer.

"Retailers are straining to keep down prices but unwanted new import tariffs would be difficult to absorb and may mean higher prices on shop shelves in Northern Ireland. We will do our part to give our consumers the best value possible but what we really need is our Executive back to work to be a strong voice for the consumer in the Brexit negotiations.”

DOWNLOAD: 

[1] Source: The Tariff Roadmap

[2] Calculations are based on import and sales data gathered from BRC members and tariff rate data from the International Trade Centre.

[3] The BRC’s latest Shop Price Index reported food inflation of 1.3%.