UK shoppers face higher prices as import costs rise to five-year high

Millions of UK shoppers faced price hikes after import costs rose to a five-year high.

The fall in the pound since June's Brexit vote was pushing up the cost of goods and ingredients from abroad.

According to figures from the Office for National Statistics, the price of imports vaulted 14.1 per cent year-on-year in October, a sharp rise on September's 8.8 per cent increase and the sharpest since September 2011.

Consumers fear that businesses hit by higher import costs would recover their costs through higher prices, which was already happening, as ''factory gate prices'' rose from 1.3 per cent in September to 2.1 per cent in October.

A number of retailers had paved the way for increase in prices. According to fashion chain Next, its prices would be up 5 per cent in early 2017.

Meanwhile, think tank, the Institute for Fiscal Studies warned households to brace themselves for an average 2.7 per cent increase in the cost of everyday goods due to the weak pound.

Further, according to commentators, predictions that the 15-per cent fall in the pound since the Brexit vote on 23 June would lead to a surge in inflation and huge hit on real incomes were proving unreliable. 

Competition from new players AO in electrical goods and Asos and others in clothing and footwear were pushing down prices on the High Street where there was a battle for survival. 

Also, no frills retailers including Hennes & Mauritz AB (H&M) and Primark were disrupting the fashion space requiring mainstream retailers like M&S to compete. 

With M&S's gross clothing profit margin at 55 per cent, it had much room to compete.

According to commentators, though shareholders might not like it, there was much scope to absorb higher-priced imports.

With around 50 per cent of the UK food consumption imported and there was no escaping higher prices for essentials such as wheat and milk.