What's going on?

#Marmitegate engulfed Britain on Thursday as the effects of the Brexit vote hit Brits where it really hurts: branded yeast extract. On a serious note, it�s a useful example of how the weakened pound is likely to hit personal spending in the UK.

What does this mean?

Tesco, the UK�s biggest supermarket, pulled dozens of products from its online offering as a result of a spat with Unilever (one of the world�s biggest suppliers of consumer products) over who should bear the cost of the weakening pound. With the pound worth less versus other currencies, British retailers are having to shell out more to bring in foreign-made goods – like Marmite. Tesco is fighting back against the higher prices by saying, essentially, we�re not going to stock your products if you (the Unilevers of the world) hike your prices that much.

Why should I care?

The bigger picture: Inflation is coming to Britain.
With the pound down about 15% versus the Euro since the Brexit vote, prices for goods made outside of Britain are on the rise. And while prices are likely to rise quickly, British wages aren�t. The result? Less money leftover in Brits� pockets at the end of the month and/or fewer goods sold by retailers.


The bigger picture: The weak pound is likely going to hurt companies that sell goods to consumers.
Either companies raise the prices of imported goods to match the effect of the devalued pound, which would lead to consumers buying fewer goods overall. Or companies don�t increase prices enough to compensate for the change in the value of the pound, and thus make less profit per product sold. The reality will probably be a bit of both, and neither option is good for profits.