No-deal Brexit means higher food prices, Morrisons warns | Business

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Supermarket prices will rise unless the UK government negotiates a duty-free Brexit deal with Europe, the boss of Morrisons, Britain’s fourth largest grocery chain, has warned.“From our perspective representing UK consumers, we would like the government and leaders of the country to negotiate a deal that does not include any tariffs from the UK to Europe or from Europe to the UK because tariffs drive inflation, ”said David Potts, managing director of the Bradford supermarket. He added that it was particularly important to avoid inflation in a “year of recession”.

Potts said Morrisons, which runs its own food processing and packaging plants and has direct relationships with farmers, was in a “good position” to weather the Brexit storm as two-thirds of the produce sold is British. But he added that the company cannot stock perishable goods, such as fruits and vegetables.

Large supermarkets line up for a rough Christmas as families watch their budgets in light of job losses and economic hardship caused by the Covid-19 pandemic. Potts said Morrisons had just launched his biggest round of price cuts as he prepared for a run into Christmas where “value and price will prevail”.

As sales in established stores rose 11.1%, the company’s profits fell by a quarter to £ 148million in the six months to August 2 as the supermarket was forced to maintain its low prices in a context of strong competition as costs increased during the pandemic.

Morrisons spent an additional £ 155million, including £ 47million in extra salary, as it took 45,000 more employees to deal with online shopping and to cover self-isolated or sick staff at the height of the pandemic . A staff bonus, a protection kit and the need for more vans and trucks to make deliveries also added to the costs, which were only partially offset by a £ 93million boost from the holidays professional rates.

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Despite the drop in profits, Morrisons said he was increasing his semi-annual dividend payout by almost 6% to £ 49million. “The nation relies on our shareholders to provide assets [so Morrisons can] let’s play our part to feed the nation, ”he said, adding that a decision on a planned special dividend was still postponed.

Morrisons’ profits were also affected by the shift to less profitable online sales, as it doubled orders through its website and increased home delivery capacity through a range of services, including Amazon and a five-fold. new box system.

Potts said Morrisons’ share of the online grocery market is now in double digits, down from around 6% earlier this year. “You can see we’ve had a wobble on the home shopping side of the industry,” he said, adding that growth continues, albeit at a slower pace than at its strongest. of the pandemic.

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