UK supermarkets inventory groceries; Consumers stated they should not be hoarding

Buyers were faced with partially empty shelves in a supermarket in London on March 14, 2020 as the coronavirus outbreak resulted in stockpiling.

JUSTIN TALLIS | AFP | Getty Images

UK grocery stores store groceries under the possibility of a no deal scenario as negotiations on a Brexit trade deal between the EU and the UK are at stake.

According to the Sunday Times newspaper, supermarkets have reportedly been instructed by government ministers to hoard non-perishable goods. Legislators said a “no-deal Brexit is imminent”. A UK government spokesman was not immediately available for comment when contacted by CNBC.

There have already been widespread warnings from business leaders of possible fresh food shortages, possible delays in deliveries from the continent and price increases in the event of a no-deal scenario – in which the UK and the EU fail to agree on a post-Brexit trade deal.

Both sides have until December 31st to agree on a deal, and although talks will continue at this late stage, they have warned that a no-deal is the more likely outcome.

However, there were glimmers of hope on Sunday when British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to “go the extra mile” and instructed their negotiators to continue speaking.

Grocery retailers are closely monitoring the negotiations, but leading chains have already taken steps to ease a no-deal situation.

Online grocer Ocado stores long-life products like Italian beer, according to a report last week, while Tesco chairman said his company “tried as much as possible to ensure that we store long-life products either in our warehouses or with our suppliers . “

Speaking to Bloomberg, John Allan said higher food prices are “inevitable” if a deal doesn’t come off, warning that grocery bills could rise by an average of 3-5% from Jan. 1. Some food products, such as B. Continental cheese could do much larger price increases with the introduction of tariffs, he said, despite urging buyers not to panic.

“There may be a shortage of fresh food, especially fresh, short-lived foods. I think this will only be for a limited time, maybe a month or two, before we’re back to normal,” Allan said.

UK Foreign Secretary Dominic Raab dismissed Tesco’s chairman’s comments and told the BBC last Thursday that he was not concerned about price increases. “Of all the things that will be a challenge, I’m not worried about whether the supermarket cabinets are empty or the cost of food prices,” said Raab, although he has admitted that there would be “some bumps on the road, if we don’t get it. ” a free trade agreement. “

No cause of action

There are fears that uncertainty about a deal could lead to panic buying among consumers.

In a no-deal scenario, the current duty-free trade relationship between the UK and the EU would end abruptly on December 31st and both sides would fail to comply with World Trade Organization rules. Both sides could then impose tariffs on each other’s imports, driving up business costs and leading to higher prices for consumers.

The UK retail consortium said the companies were trying to prepare for a no-deal situation, warning consumers against stockpiling goods.

“Retailers are doing everything they can to prepare for any January 1st eventuality. They are increasing inventory of cans, toilet rolls and other longer-lasting products so that enough critical items are available,” said Helen Dickinson, BRC executive director in one Statement Sunday.

“While no amount of preparation by retailers can completely prevent disruption, the public does not need to buy more food than usual as the main impact is on imported fresh produce such as fresh fruits and vegetables that cannot be stored by either retailers or for extended periods of time by consumers, “she said.

The BRC warned that without a deal, the UK public will face food duties in excess of £ 3 billion (US $ 4.02 billion), saying that retailers “would have no choice but to offer some of these additional costs.” Passing on their customers who do so would see filters for higher prices [through] in 2021. “In addition, new checks and red tape, effective January 1, are expected to put an additional burden on retailers and their customers.

Like other sectors that could be hard hit by a no-deal outcome, such as the automotive industry, the BRC has urged the UK and EU “to do what is necessary to get a zero-tariff deal, otherwise it will be the public.” . ” that pays the price for that mistake. “

Probably higher food prices and a disruption of inventories would occur after an already difficult year for consumers in light of the coronavirus pandemic, adding an additional burden to household finances.

The lifting of regional coronavirus restrictions for Christmas is also likely to increase demand for goods in supermarkets. This at a time when delivery problems have been occurring due to clogging in one of the UK’s largest ports in Felixstowe on the east coast of England, reportedly due to a backlog of containers with personal protective equipment.