Supply Chains

A Bank of England Agent’s summary for Q3 has concluded that the devaluation of sterling has started to increase the cost of raw materials, in turn putting pressure on supermarket suppliers. The ability to pass on cost increases appears to be differentiated by sector, with certain commoditised services (cleaning, security) being more able to pass on increases than, for instance, professional services. Meanwhile, Sainsbury’s CEO Mike Coupe, has indicated a view that price increases are not a necessary consequence of Brexit, with strong harvests likely to keep downward pressure on the cost of goods. Watch with interest next year, as hedging comes off and competition between the big retailers hots up.