- The majority of apparel and home goods sold in UK retail are purchased in dollars from Asia.
- Pound reached an all-time low of $1.0327 against the dollar.
- Many retailers will likely have contract clauses that let them to hedge their currencies.
Following the pound’s decline versus the dollar, British consumers are likely to see significant price increases for apparel and household goods, according to experts McKinsey.
The majority of the apparel and home goods sold in UK retail are purchased in dollars from Asia. On Monday, the pound reached an all-time low of $1.0327, dramatically increasing the price of imports.
When asked about the effect on consumer prices, Anita Balchandani, leader of McKinsey’s consumer industries and apparel, fashion, and luxury work in EMEA, responded, “With cost of goods being such a high proportion of the cost base of a company then the extent to which if you have that denominated in the dollar then it’s a pretty material effect.”
According to her, how businesses have hedged their currency exposure will determine the impact on them and, ultimately, on consumers.
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