Electrical goods to cost more as yen soars against pound

GADGET prices are set to soar on the high street because of the strength of the yen, experts warned today.

Manufacturers such as Sony, Canon and Nikon are believed to be planning rises of between five and 10 per cent to cover their increased costs.

Today experts said consumers are likely to bear the brunt of these rises after decades of falling consumer electronics prices.

Prices have fallen on average 15 per cent in the past 12 months alone, according to recent figures.

The pound has lost half its value against the yen since July 2007, an even bigger fall than it has suffered against the dollar and the euro.

Experts said the fall was so huge that manufacturers had no choice but to pass it on to consumers.

It could add hundreds of pounds to such things as big screen televisions. For instance, a recently launched ultra-slim 40in TV from Sony is currently advertised for £2,929. However, because of the yen's performance it could rise by as much as 10 per cent to £3,222.

Photographers are also due to suffer. Canon's flagship Eos 5D Mk2 digital camera, which costs £2,450, could rise by £123 if an expected five per cent rise on prices is imposed.

Stuart Miles of the Pocket Lint gadget website said: "There is simply no way these companies can carry on without raising their prices outside Japan."

Sony has warned it will make a record loss this year. And camera and printer maker Canon has already acted by increasing its prices across Europe by about five per cent, and as much as 10 per cent in the UK.

Mr Miles said: "There is fierce competition in the eletronics retailing industry. Retailers would usually tend to absorb price rises most of the time. But at the moment they are already operating on incredibly thin margins.

"I think we are going to see a lot of electronics retailers, both online and in the high street, go under because of these pressures, so it will end up being the case that those who remain have no choice but to raise prices."

Last week Leeds-based retailer Empire Direct, one of the biggest online retailers, went into administration, shutting the chain's 14 warehouse shops and online store.

Mr Miles advised consumers to buy now if they were considering purchases. "We just don't know how this will pan out over the coming months, so I think consumers should buy now, rather than wait and see," he said.

The falling pound is also hitting the cost of other imported goods, although many retailers have hedged against currency gyrations at least for the first part of the year.

But Next chief executive Simon Wolfson has warned that the first clothing inflation for a decade could hit the high street by next summer because of higher import costs as hedging protection comes to an end.

Some food prices might also be hit as Britain imports about 25 per cent of its fresh food. The bosses of two of Britain's biggest food businesses, Premier Foods and Northern Foods have also warned of the threat of inflation.

The overall rate of inflation fell to 3.1per cent in December, a smaller drop than the City expected. In part this was because food prices are coming down less quickly than forecast.

However, the gathering recessionary storm will make it hard for retailers to pass on any increases caused by the currency collapse.

A spokesman for the British Retail Consortium said: "Non-food prices fell 2.4 per cent in December. The weakness of the pound is squeezing retailers margins, they are simply not in a position to put consumer prices up."