Expect "considerable" food price rises if tariffs change after Brexit, economists warn

 
Helen Cahill
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Tariffs could jump on certain food products (Source: Getty)

Economists have warned that Brexit could cause "considerable" changes to food prices if tariffs are hiked on imported goods.

The devaluation of sterling has already inflated prices for food manufacturers, and leaving the EU could add more to the woes of the retail industry if importers are forced to pay hefty duties on products.

Read more: Labour's Brexit policy gaffes are wearing thin

Researchers from the Institute for Fiscal Studies have said that leaving the EU without a trade deal would mean switching to the World Trade Organisation's system, which would result in higher tariffs on goods imported from the EU.

However, these tariff rates alone will not determine the price changes of particular products. The EU also applies charges that alter depending upon a threshold level of imports of a product.

"Tariffs can affect the costs of food products directly and indirectly," the researchers said. "The direct effect is on food products that are imported into the UK and sold directly to consumers. However, there is often also an indirect effect on costs if UK food manufacturers import intermediate goods for us in manufacturing."

The indirect effects of tariffs make it very difficult to assess how prices will change after Brexit, they said. In addition, it is not known the extent to which these cost price increases will be passed on to supermarkets, and eventually, the consumer.

Staying in both the Single Market and the Customs Union would keep tariffs on goods stable, however, the Conservative party has said Britain will be leaving both.

Read more: Labour will meet Barnier, but EU says it "doesn't really change things"

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