‘We can’t absorb price rises forever,’ warns manufacturer

Retailers are ‘short-sighted’ for blaming price increases solely on exchange rate fluctuations since the EU referendum, a leading kitchen and bathroom supplier has claimed.

Wishing to remain anonymous, he stated that manufacturers and suppliers had little control over price increases and that many have even tried to absorb the increased costs and hold off on price rises until the New Year.

“I fully expect many manufacturers will be advising of increases, to be implemented from January 2017,” he said. “The simple truth of the matter is you can only absorb additional costs for so long, hoping that exchange rates improve.

“On the first day of trading, January 4, 2016, £1 would buy you €1.3597. On the day prior to the referendum, £1 bought €1.3056. If you compare the lower rate of June 22, at €1.13, the pound has devalued by 13%. Compare it with the start of the year and the pound has dropped in value by 16%.

He added: “The well-debated fall in exchange rates has had a knock-on effect and as a consequence, a diluted price increase has been implemented and passed through the supply chain.”

Additionally, the industry has been hit by a ‘double whammy’ over the past 12 to 18 months, the suppler claimed, with the introduction of the workplace pension scheme and the implementation of the National Living Wage.

“I appreciate that retailers and merchants have had to absorb the same legislation, however the more staff you employ, the bigger the financial burden there is to bear,” he said.

He concluded: “Manufacturers are not the fat cats of the industry that many people assume they are. By their very nature, they invest in buildings, plant machinery, people, R&D, raw materials, finished goods, warehouses and deliver to their customers. To achieve this everyday function, in many cases involves employing hundreds of people and purchasing raw materials or components from the UK, Europe and the rest of the world.”


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