- Supermarkets Deny Excessive Profits Amid Rising Prices
- Competition Watchdog Investigates Food and Petroleum Prices
- Calls for Price Reductions and Fuel Price Transparency
According to supermarket executives, the industry is “more competitive than ever before.”
The executives of Tesco, Sainsbury’s, Asda, and Morrisons were questioned about rising food and petroleum costs.
Supermarkets denied making excessive profits and said they protected customers from rising prices.
The competition watchdog is investigating the prices of food and petroleum.
It is investigating whether the lack of competition has caused customers to overpay.
The Business and Trade Committee of the House of Representatives questioned supermarket executives on Tuesday as to why food prices continued to rise despite declining wholesale costs.
Food costs rose 14.6% in the year to June, according to the British Retail Consortium (BRC), which represents supermarkets. The year-to-date rate of 15.4% was lower than this, but prices are still rising.
The persistently high inflation rate in the United Kingdom is largely attributable to the continued rise in food prices.
Chairman Darren Jones stated that, except Morrisons, all four supermarkets had increased profits in comparison to before the Covid pandemic.
Mr. Jones stated that he had recently heard that Asda employees “had to go to the food bank to collect donations of food that they had stacked in their supermarket because they were unable to make ends meet.”
However, the supermarkets asserted that they all pay at least the National Living Wage and that they are doing everything possible to safeguard consumers from rising energy, labor, and commodity costs.
Conservative MP Jane Hunt asked executives if they were “in fact a cartel” setting prices.
Asda’s chief commercial officer, Kris Comerford, dubbed UK retail “the most competitive,” echoing Sainsbury’s and Tesco executives.
Each of the four supermarket executives stated that they did not support a price cap on essential foods, an idea that the government had contemplated but never formally proposed.
Politicians, trade unionists, and the governor of the Bank of England have all questioned why supermarket prices have not decreased at the same rate as the wholesale cost of ingredients like wheat.
Some have suggested that retailers fail to transfer savings onto consumers and instead bank the profit.
Supermarkets have previously stated that they have reduced prices whenever possible and that it typically takes three to nine months for decreases in wholesale costs to be reflected on store shelves.
British Retail Consortium head Helen Dickinson expected food inflation will drop to single digits later this year.
On Monday, Sainsbury’s pledged £15 million to lower rice, pasta, and chicken prices. This makes Sainsbury’s the most recent of the major retailers to reduce prices on staples.
However, milk and eggs remain relatively costly in comparison to their pre-Covid prices.
Jamie Keeble, the co-founder of Heck, a manufacturer of sausages and burgers that supplies the majority of major supermarkets, stated that the price of pork is anticipated to remain high for the next 18 months.
He stated that the only way supermarkets could lower their prices was by requesting cost reductions from their suppliers. But he added, “We are not in a position to begin offering price reductions on our products.”
“Ultimately, [the supermarkets] will have to reduce their profit margins if they want to reduce the prices on the shelf; that’s the only way to do it.”
Separately, all four supermarket executives supported calls for greater fuel price transparency after MPs pointed out that prices for petrol and diesel were lower in Northern Ireland due to widespread data sharing with drivers.
According to a study conducted by the London School of Economics last month. Nearly a third of the food price inflation since 2019 can be attributed to Brexit.
