When will consumers really see the gains from sterling’s fall?

There has been a lot of focus on the pain of Brexit for exporters. But we should also be seeing some gains in the shape of lower price for imports from the UK.

The row between Unilever and Musgraves – the owner of Centra and SuperValu – indicates that this process is not going to be straightforward. It also illustrates a wider point about the huge disruption Brexit is going to cause the supply chains which are involved in bringing products to consumers. Marmite may be back on the UK shelves as the row between Tesco and Unilever is solved, but there is more of this to come.

First a positive indication. The September consumer price index figures showed a sharp 0.4 per cent drop in prices, which are now 0.8 per cent lower on average than their levels in June. As Davy stockbrokers put it: “This must in part reflect sterling’s weakness against the euro, with the UK currently accounting for 38 per cant of imported consumer goods.”

But it is unlikely to be a smooth process as manufacturers and retailers try to work out where sterling will settle and squabble about who should benefit and how much of the gain should go to the consumer.

The row between Unilever and Musgraves got hot and heavy on Friday, but it appears that the Irish retailer felt that sterling price increases that Unilever was pushing through were not justified. Because sterling has fallen against the euro, this would probably not have meant actual price rises for Irish shoppers, but it would have meant they would not have gained from sterling’s decline.

It will probably be sorted, but it is just a sign of things to come in a complex world where company supply chains criss-cross national borders.

For Ireland it will be another factor holding down the overall price level. Prices in September were unchanged, on average, on one year earlier. As these deflationary forces take hold, the scale of pay demands being tabled by some public sector unions look more and more ridiculous. How can you justify big rises – and in some cases like the transport companies knock-on costs for consumers and businesses – with inflation at zero?