UK
Supermarkets to be questioned by MPs on why their prices are still rising
Carlo Simone
Mon, 26 June 2023
Supermarket executives will argue that they are not pocketing profit from increased food prices (Image: PA)
Supermarket executives from Tesco, Sainsbury's, Asda and Morrisons are set to appear before MPs on Tuesday to face questioning about why food prices are still rising whilst some wholesale costs are falling.
The parliamentary committee will examine the cost of a weekly shop, as the price of goods continues to grow but less steeply than in previous months, according to the latest figures.
The British Retail Consortium has reported that food inflation reached 14.6% in June, a decrease from 15.4% in the year to May.
However, food prices remain a core reason why the overall rate of inflation within the UK remains stubbornly high, and supermarkets are under pressure to defend the high cost of shopping, BBC News reports.
The Argus: The British Retail Consortium suggests it can take a period of time for price cuts to filter through
The British Retail Consortium suggests it can take a period of time for price cuts to filter through (Image: PA)
Supermarkets deny pocketing profit from increased prices
Politicians, trades unionists and the Governor of the Bank of England have all questioned why prices on supermarket shelves have not fallen as rapidly as the cost of some ingredients, such as wheat.
They have suggested that retailers may be pocketing profit instead of passing on savings to customers.
The Competition and Markets Authority is currently examining the issue.
Supermarkets themselves deny profiteering from high prices, claiming that profits are being squeezed, but they are cutting prices wherever possible.
Most of the big chains have recently introduced high-profile price cuts on staples, and Sainsbury's has just announced that it will invest £15m to reduce the cost of basics such as rice, pasta and chicken.
Rhian Bartlett, food commercial director at Sainsbury's, said: "These latest price cuts will help reassure customers that we will continue to pass on savings as soon as we see the wholesale price of food fall."
Other large chains such as Tesco, Morrisons, M&S, Aldi and Lidl have also reduced prices on items like bread, milk and butter.
However, some products, such as milk and eggs, remain relatively expensive compared to pre-Covid prices.
The Argus: Some food items still remain expensive compared to their price before the Covid pandemic
Some food items still remain expensive compared to their price before the Covid pandemic
Supermarket executives will argue that not all commodities have decreased in price, highlighting items such as sugar, potatoes and chocolate, which have risen in cost.
What are the reasons behind the food price rises?
Severe weather has caused lower supplies of potatoes, carrots and onions within the UK, which has required more items to be imported.
Meanwhile, wheat, which has decreased in price on global markets, is largely supplied by UK growers, meaning that food manufacturers will be purchasing last year's crop at the previous year's prices.
Additionally, cheese sold today has been made with milk bought up to a year ago, so will not reflect recent falls in milk prices.
Analysts suggest that executives will point to other costs affecting food retail, from rising wages to added charges related to Brexit, such as veterinary certificates.
The executives also plan to suggest that falls in commodity prices take time to filter through to the consumer, as the British Retail Consortium has previously explained that typically there is a three- to nine-month lag for price falls to be reflected in shops.
Supermarkets to be questioned by MPs on why their prices are still rising
Carlo Simone
Mon, 26 June 2023
Supermarket executives will argue that they are not pocketing profit from increased food prices (Image: PA)
Supermarket executives from Tesco, Sainsbury's, Asda and Morrisons are set to appear before MPs on Tuesday to face questioning about why food prices are still rising whilst some wholesale costs are falling.
The parliamentary committee will examine the cost of a weekly shop, as the price of goods continues to grow but less steeply than in previous months, according to the latest figures.
The British Retail Consortium has reported that food inflation reached 14.6% in June, a decrease from 15.4% in the year to May.
However, food prices remain a core reason why the overall rate of inflation within the UK remains stubbornly high, and supermarkets are under pressure to defend the high cost of shopping, BBC News reports.
The Argus: The British Retail Consortium suggests it can take a period of time for price cuts to filter through
The British Retail Consortium suggests it can take a period of time for price cuts to filter through (Image: PA)
Supermarkets deny pocketing profit from increased prices
Politicians, trades unionists and the Governor of the Bank of England have all questioned why prices on supermarket shelves have not fallen as rapidly as the cost of some ingredients, such as wheat.
They have suggested that retailers may be pocketing profit instead of passing on savings to customers.
The Competition and Markets Authority is currently examining the issue.
Supermarkets themselves deny profiteering from high prices, claiming that profits are being squeezed, but they are cutting prices wherever possible.
Most of the big chains have recently introduced high-profile price cuts on staples, and Sainsbury's has just announced that it will invest £15m to reduce the cost of basics such as rice, pasta and chicken.
Rhian Bartlett, food commercial director at Sainsbury's, said: "These latest price cuts will help reassure customers that we will continue to pass on savings as soon as we see the wholesale price of food fall."
Other large chains such as Tesco, Morrisons, M&S, Aldi and Lidl have also reduced prices on items like bread, milk and butter.
However, some products, such as milk and eggs, remain relatively expensive compared to pre-Covid prices.
The Argus: Some food items still remain expensive compared to their price before the Covid pandemic
Some food items still remain expensive compared to their price before the Covid pandemic
Supermarket executives will argue that not all commodities have decreased in price, highlighting items such as sugar, potatoes and chocolate, which have risen in cost.
What are the reasons behind the food price rises?
Severe weather has caused lower supplies of potatoes, carrots and onions within the UK, which has required more items to be imported.
Meanwhile, wheat, which has decreased in price on global markets, is largely supplied by UK growers, meaning that food manufacturers will be purchasing last year's crop at the previous year's prices.
Additionally, cheese sold today has been made with milk bought up to a year ago, so will not reflect recent falls in milk prices.
Analysts suggest that executives will point to other costs affecting food retail, from rising wages to added charges related to Brexit, such as veterinary certificates.
The executives also plan to suggest that falls in commodity prices take time to filter through to the consumer, as the British Retail Consortium has previously explained that typically there is a three- to nine-month lag for price falls to be reflected in shops.
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