It is official, Brexit is not shrinking chocolate bars.
Sweet-toothed UK consumers reacted bitterly last year when it was announced five months after the EU referendum that Toblerones would get smaller.
Images linking the redesign with Brexit were shared thousands of times online and a question was even raised in the Scottish parliament.
Mondelez, which makes Toblerone, said at the time that Brexit had nothing to do with the change and the Office for National Statistics (ONS) confirmed on Monday that the phenomenon of “shrinkflation” – when a product shrinks while the price stays the same – has not become more widespread since last June’s vote.
Shrinkflation affects sweets and chocolate more than any other category of goods, the ONS said, but has a negligible effect on overall inflation.
Drop in sterling
In the past five years, the ONS recorded 2,529 products that shrank, including 550 between July 2016 and June 2017 after the value of the pound fell and pushed up import prices.
Its analysis, it said, did not show “a noticeable change following the referendum that would point towards a Brexit effect”, it said.
However, Chris Clare from Prestige Purchasing, a consultancy that tracks food prices, said he expects more shrinkflation.
“It’s a good option for some manufacturers where consumers are particularly price sensitive,” he said.
However, consumers could turn against the technique, said Mr Clare. “If this becomes a ‘big manufacturers are ripping us off’ kind of story . . . then I think we’ll see more manufacturers going back to [putting the prices up].”
Inflation
Inflation has risen since the referendum, although it fell last month from May’s four-year high of 2.9 per cent to 2.6 per cent, helped by lower fuel prices.
Alan Clarke, head of European fixed income strategy at Scotiabank, said the full effect of the weakness of the pound was yet to be felt.
“The effect of the exchange rate post-Brexit [vote] is still percolating through,” said Mr Clarke, citing a typical six to nine-month time lag between big exchange rate moves and supermarket price rises.
Food manufacturers, including Unilever, said last year that the falling value of sterling since the vote was pushing up the cost of imports and would force them to raise their prices.
– Copyright The Financial Times Limited 2017
