James Brown, Partner and head of the UK Consumer & Retail practice at Simon-Kucher & Partners (the world’s leading pricing strategy consultancy), comments on today’s Consumer Price Inflation figures for May...

Brexit squeeze

The CPI rate climbed to 2.9% in May, a 0.2%pt gain from last month and its highest level since June 2013. This will be the fourth consecutive month CPI is above the 2% target set by the Bank of England.

Brexit has been the biggest driver of rising inflation through higher import costs feeding through following the pound depreciation last year against the euro and the dollar.

Simon-Kucher’s latest nationally representative Brexit survey shows that Brexit-related price increases will continue to have a significant effect on the spending habits of much of the UK population, particularly the middle earners. For instance, 62% will spend less or do without the purchase of a new car. And it is not only large purchases that will be affected, but also essentials. More than half of those surveyed would scale-back on groceries by either spending less or switching to cheaper products.