PepsiCo (PEP) is set to increase the price of Walkers' potato chip brand in the U.K. in the wake of the pound's steep decline following the country's vote to leave the European Union in late June.
Media reports have indicated PepsiCo is asking supermarkets to pay 55 pence ($0.68) instead of 50 pence for a 32 gram bag of Walkers crisps (the U.K. version of Lay's potato chips). Walkers declined to confirm the increase when contacted by TheStreet.
"Whilst our potatoes are British, we import a number of different ingredients and materials to produce a finished packet of Walkers crisps e.g. seasonings, oil for frying and key raw materials used in our packaging film," a Walkers spokesperson said in an emailed statement.
"Fluctuating foreign exchange rates, supply pressure on key ingredients and the weakened value of the Pound are impacting the import cost of some of our materials and affecting the price of material costs based on commodities that are traded in Foreign currencies," the statement said.
The spokesperson added that it was up to individual retailers to determine if any price increases will be passed on to consumers.
The move the latest in a series of price hikes that are set to hit British shoppers as inflation accelerates in the months ahead.
The pound is still hovering at 31-year lows, having fallen 19% since the June 23 vote. In last week's quarterly Inflation Report, the Bank of England predicted that inflation would likely accelerate faster than it had estimated and now sees consumer prices rising at 2.7% pace for each of the next two years, up from previous forecasts of 2.0% and 2.4%.
New York-listed Nomad Foods (NOMD) also said that it would be raising prices in the region of 5% for its Birds Eye line of frozen foods, the second such hike since 2012.
"Many of our raw materials are priced in dollars and the fall in the value of the pound since the EU Referendum has meant that our costs in sterling have risen," Wayne Hudson, Birds Eyes U.K. and Ireland Managing Director, said in a statement to TheStreet.
"As such, we have been in open and collaborative conversations with the retailers for some time now and are working closely with them to minimise any impact on our customers," he added.
PepsiCo was down 0.77% in New York Friday, closing at $105.81 ,while Nomad Foods fell 2.17% to $11.27.
The price increases follow a very public spat last month between Unilever (UL) and U.K. supermarket giant Tesco (TSCDY) after the former demanded a 10% increase on its products, including the popular Marmite spread, due to the fall in the pound. Tesco refused to pay the increase and pulled products off the shelves. The two have since come to an agreement, the details of which were not make public.
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