One of the country’s biggest jewellery groups has warned that it could be “impossible” to hold off raising prices if current volatility in the currency market fails to subside.
Retailers in the jewellery industry are particularly exposed to pricing pressure if they are buying gold and diamonds in dollars using the pound, which has been in freefall since Brexit.
And further bad news was delivered last week when it was announced that the UK consumer price index jumped to 1% in September, higher than the City had anticipated.
The situation has led Brian Duffy, CEO of Aurum Holdings – parent company of jewellery businesses Goldsmiths and Mappin & Webb – to predict that jewellers will find it increasingly hard to resist price increases.
In an interview with the group’s local paper, the Leicester Mercury, Mr Duffy, said: “Anything we import is more expensive now, so at some point, even everyday commodities are going to become more expensive for people to buy. We’re seeing that with gold and diamond prices now as we buy everything in dollars. The gold prices are rising and the diamond prices will rise.”
Currently the gold price in pounds is up 37% on last year, despite being less than 10% up in dollars. On a six-monthly basis gold is up 22% in pounds and 4% in dollars.
Mr Duffy said that Aurum has so far avoided tweaking jewellery prices by taking a hit on margins, but he suggested there was a limit to how long the company could continue adopting this strategy.
“We’re not increasing any prices to the consumer right now and taking a lower margin on it all. But eventually that could become impossible to do,” he said.
The British Retail Consortium says that inflationary pressure in the supply chain is a major concern for the retail channel right now.
“Retailers are firmly on the side of consumers in negotiating with suppliers and improving efficiencies in the supply chain to control the inflationary pressure that is building through the devaluation of the pound,” commented chief executive Helen Dickinson.
“However, years of falling shop prices and higher costs have left limited scope for retailers to continue absorbing this pressure, and everyone in the supply chain will need to play their part in maintaining low prices for consumers.”