HomeBrexit and Weak Pound Start to Increase Electricals Prices
Brexit and Weak Pound Start to Increase Electricals Prices
Updated 01 November 2016 by Matthew
With the number of heavily discounted deals on TVs and Laptops currently being promoted it's hard to imagine that the price of electricals is doing anything other than dropping dramatically. However our latest analysis shows that retailers are actually increasing their prices on more and more of their products.
We analysed over 400,000 product price movements between July and October 2016 to determine how frequently retailers were increasing or decreasing their prices.
Following the UK's referendum decision on 23 June 2016 to leave the European Union the Pound has dropped by 18% against the US Dollar and by 14% against the Euro. Many of the larger retailers managed to hedge their currency risk prior to the referendum decision which, combined with pre-purchased stock, has allowed them to partially delay passing on the price increases on imported goods to consumers.
However, our analysis found that price increases are now becoming more and more common as the impact of the weak pound starts to take effect. Our study found that the proportion of price changes that are price rises has increased significantly since June. Notably Apple increased many of it's prices in September in response to the weakening pound.
Proportion of Price Increases
Each month we looked at the number of price changes that were price increases and the number that were decreases. We then compared the increases to the decreases to determine whether retailers were adjusting a greater proportion of their prices upwards. In June 2016 the proportion of retailer price changes on electricals that were price increases was only 16.5%. By October 2016 this figure had nearly doubled to 31.6% indicating that retailers are increasingly needing to up their prices.
The proportion of retailer's price changes that are increases has almost doubled in the last 4 months.
Price Increases By Category
Our analysis found that the greatest number of price increases where on PC monitors, where over 1,000 products increased in price between July and October 2016. Significant numbers of price increases were also seen in ovens, projectors and fridge freezers and TVs. In total over 5,000 products had increased in price over the last 4 months.
The biggest price increases were on TVs where retailers that did increase their prices did so by an average of 11.9%. This represents an average increase of £88.80.
The percentage increases across all categories was still below the 18% reduction in the value of the Pound, suggesting that retailers have still only passed on part of the true increase in the cost of electrical products. If the full 18% drop in value of the Pound was applied to TVs then the average TV would increase in price by £174.
We have seen price increases averaging 8% on electricals in the last 4 months, but the value of the Pound has dropped by 18% over the same period, so further substantial price increases are expected.
Examples of Typical Price Increases
Below are some representative examples of the observed price increases between July and October 2016.
Number of Retailers That Increased Their Price
Average % Increase
Lec L5010W Freestanding Fridge - White
HP Z30I LCD Monitor
Bosch HBC84H501B Built in Compact Oven with Microwave