THE supermarket sticker shock threatened by a no-deal Brexit has been averted, but British shoppers still may find prices creeping higher in the new year.

A raft of red tape plus new checks at the border could add 3 billion pounds (US$4.1 billion) in costs for food importers, according to the U.K.’s Food and Drink Federation. That’s about an 8 percent increase, some of which could work its way down to prices paid at checkouts.

“We are moving from a situation where we had frictionless trade to one where we have a great deal of friction,” said Dominic Goudie, the federation’s head of international trade. “Any suggestions that these costs will not lead to an increase in food prices should be taken with a really hefty pinch of salt.”

The U.K. buys about half its food from abroad, with the bulk of those imports coming from the European Union. Even before Brexit, food insecurity was on the rise in the U.K., and the pandemic has snarled supply chains.

As suppliers, already squeezed by thin margins, count the new costs of the split from the bloc, the question is who is going to bear the brunt. Estimates from the industry-funded Agriculture & Horticulture Development Board show expenses increasing 5-8 percent for livestock products and 2-5 percent for crops trade.

“There could be a tempestuous set of discussions to come between suppliers and supermarkets, who are ever-aware of the need to be price-competitive,” said Will Hayllar, a partner in the consumer goods practice at OC&C Strategy Consultants Ltd. in London.

The double whammy of the virus’ economic fallout and the extra Brexit costs could worsen the U.K.’s food insecurity, said Mark Curtin, CEO of London-based The Felix Project, a food-waste redistribution charity.

The group provided the equivalent of almost 21 million meals last year, and that’s expected to jump to 38 million this year. To accommodate those needs, it’s opening a 9,000-square-foot warehouse in East London later this year.

“We are already facing huge demand,” Curtin said. “This will only be further exacerbated because of the need to help people who are finding it difficult to afford quality food.”

Any border bottlenecks would add to the trade disruptions seen before Christmas, when France temporarily halted traffic due to a new coronavirus strain and created miles-long backups that stranded drivers for days. The port chaos has left European freight forwarders rejecting contracts to take loads into the U.K. due to fears the scenario will repeat itself post-Brexit. (SD-Agencies)