Here’s the latest headline from Brexit Britain: The crashing pound is creating shortages of ice cream, soap and instant noodles.
The U.K.’s largest supermarket chain, Tesco, has pulled Ben & Jerry’s ice cream and Marmite spread from its online store because of a dispute over who should bear the burden of the weaker currency — its supplier or consumers.
The spat between Tesco and Unilever burst into the open on Thursday after the consumer goods company reportedly asked for a price hike on products including Dove soap and its line of instant noodles.
“We are currently experiencing availability issues on a number of Unilever products,” Tesco said in a statement. “We hope to have this issue resolved soon.”
The dispute was triggered by the collapse in the pound since Britain voted in June to leave the European Union. That is pushing up the cost of imports and hurting Unilever’s earnings.
Unilever is based in the Netherlands and the U.K. but reports its earnings in euros. The pound has fallen by 15% against the euro since June 23.
Unilever, which reported its latest quarterly earnings on Thursday, addressed the issue of price hikes in a call with analysts.
“We are confident that this situation will resolved pretty quickly,” chief financial officer Graeme Pitkethly said.
Shares in both Tesco and Unilever dropped 2% in early trading.
“Yesterday, the implications of the pound’s fall on prices and retailer margins hit home for the wider public as the country’s leading supermarket engaged in a war over prices with its highest profile supplier of branded goods,” said Kit Juckes, a strategist at Societe Generale.
Britain’s supermarkets are particularly sensitive to changes in costs. The grocers have for years been locked in a brutal price war and their margins are razor thin. That’s why Tesco is resisting Unilever’s demand.
Ken Odeluga, a market analyst at City Index, said more disputes of this type should be expected — especially if the pound weakens further.
“Pressures are building in the consumer sphere following the Brexit vote and they’re likely to persist,” said Odeluga.