Tesco CEO Dave Lewis has warned its global suppliers not to artificially hike prices in response to the weakened pound.
Lewis announced that the supermarket giant will cut ties with suppliers if they inflate prices to tackle the recent British currency volatility.
While accepting suppliers are facing inflationary pressures, Lewis urged multi-national companies to refrain from raising prices just to reassure investors.
"The only thing we would ask of companies that are in that position is they don’t ask UK customers to pay inflated prices in order that their reporting currency is maintained,” Lewis told BBC News.
“They don’t do that for countries outside of the UK."
Although Lewis said it was the multinationals right to try and push for a price increase, he said it was also Tesco’s right to say “we will no longer stock them if they do so without a justified reason”.
The comments from the supermarket boss come in the wake of the retailer’s recent dispute with major supplier Unilever, which left Tesco shelves empty of some household brand names after it refused to stump up for inflated prices imposed by the supplier.
These comments come just weeks after Sainsbury’s chief executive Mike Coupe said that major suppliers should take the hit for the falling value of the pound as many are in a more profitable position than the retailers they serve.
Official figures released this week by the Office for National Statistics fuelled fears that the weak pound will drive up costs for British businesses. The price of materials and fuels for manufacturers increased by 12.2% in the year to October 2016, marking the biggest increase for five years.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.