Nothing has changed, people are going about their business. That was the message that Walter Zanre reported to his bosses in Italy in the days after the UK voted to leave the EU.
Now Mr Zanre, who heads the UK arm of the Filippo Berio olive oil company, senses that something is afoot. “The chickens are beginning to come home to roost,” he says.
After a 17 per cent fall in the value of the pound against the dollar since the Brexit vote, Britain, an island nation that has always imported goods from around the world to satisfy its needs, is waking up to rising prices.
The first psychological blows were landed at airports, ferry and rail terminals, where British travellers suddenly found that foreign currency booths were selling them euros at parity with sterling.
Then came a spat this week when the UK’s largest supermarket, Tesco, pulled supplies of Marmite and Ben & Jerry’s ice cream from its online shelves after refusing to accept a 10 per cent price increase demanded by its Dutch supplier, Unilever.
The two sides made peace, but analysts and executives expect more shots to come.
In the months ahead, the price of everything from olive oil to package holidays, petrol and electronic goods to clothes will go up, crystallising the cost of Brexit in the public consciousness for the first time.
Mr Zanre warns that it is only a matter of time before he raises prices. If the pound reaches parity with the euro, as some expect, then he forecasts British shoppers will soon have to pay 20 per cent more for their olive oil.
“Anything that’s imported is facing this situation,” he says. Food producers have warned that they cannot absorb the higher cost of imported commodities and will have to pass them on. Supermarkets, with their tight margins, are likely to follow suit.
Alan Clarke, UK and eurozone economist at Scotiabank, warns that the real pain will be felt in 2017. “No one wants to be the first-mover, but as soon as one of those retailers capitulates all of them will be at it,” he predicts, adding: “It is a squeeze now, it’s a vice-like grip next year.”
The rise in the cost of petrol is already apparent. It is priced in dollars, causing foreign exchange shifts to flow directly to the pump. Since August, British prices have steadily ticked up from 110.03 pence per litre to 113.04 in October. For November, Mr Clarke is expecting 116.00 or more.
Holidays to the US and Europe — some offered by package tourism companies — are also more expensive, as many will discover as schools decamp for their half-term holiday later this month.
“Anybody heading across to the continent is going to be in for a nasty shock,” says Laith Khalaf, senior analyst at the fund manager Hargreaves Lansdown.
For other items, it is hard to say just when Brexit will bite. It depends, among other factors, on the terms and duration of supply contracts; how much of the price increase companies are willing to absorb before passing it on to consumers; and what sort of currency hedges they have in place. For Filippo Berio, the currency hedges last only three months. “We sell olive oil — we are not currency speculators,” says Mr Zanre.
Not everyone is complaining about the weak pound. Hampshire-based Jude’s Ice Cream is encouraged by the prospect of Ben & Jerry’s, an industry goliath, losing its grip on Britain, even for an instant.
“It is an unforeseen opportunity that we are very excited about,” says Chow Mezger, the company’s managing director, who estimates that 95 per cent of his ingredients, from milk to sugar, are British.
“It is going to raise awareness that British companies are making amazing products and hopefully it will encourage people to try them,” he adds.
In ice-cream terms, then, Brexit Britain may mean trading Cherry Garcia for Salted Caramel with Maldon Sea Salt. British beef exporters may also see a boost, assuming their feed prices are not too expensive.
But in other industries, switching to British-made products may be less appealing. “You look at the electronics industry. What is the UK-manufactured alternative? There is not one,” says Rob Vivian, who founded Pure Comms, a telecommunications company seven years ago.
Pure Comms has offices in Bristol and Cornwall and a turnover of about £2m. It sells equipment made by a division of Germany’s Siemens and has already seen prices rise 12 per cent since June.
Until now, Mr Vivian has absorbed the increases to keep business flowing but he acknowledges this may not last. He sounds sceptical when asked whether Siemens might show some leniency to a loyal customer.
“They are a global company. The actual UK market is not that big,” he says, adding: “It is not just the German products, it is everything. It is all going up.”