Executives from leading UK supermarkets like Tesco, Sainsbury’s, Asda, and Morrisons have refuted allegations of making excessive profits amid price hikes. In a meeting with MPs on the Business and Trade Committee, they stressed that the industry is fiercely competitive, rejecting accusations of unfair gains.
The Competition and Markets Authority is investigating food and fuel prices to assess if lack of competition has led to customers paying more. MPs grilled supermarket leaders about the continuous increase in food prices despite some wholesale costs going down.
According to the British Retail Consortium (BRC), food prices in the UK rose by 14.6% in the year leading up to June, a slight reduction from the previous year’s 15.4% surge. Although the rate of increase has lessened, grocery prices still significantly contribute to the UK’s high inflation.
Committee chairman Darren Jones highlighted that all supermarkets, except Morrisons, reported higher profits compared to before the pandemic. He also mentioned Asda employees using food banks due to financial struggles. However, supermarket executives defended themselves by stating they pay at least the National Living Wage and strive to protect customers from rising energy, labor, and commodity costs.
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When questioned about collusion and price-fixing, Asda, Sainsbury’s, and Tesco executives stressed the competitiveness of the UK retail market. They denied being part of a cartel and opposed suggestions of imposing price caps on essential foods, an idea that was never formally proposed by the government.
Concerns have been raised by politicians, trade unionists, and the Bank of England governor over the slow decrease in supermarket prices compared to lower wholesale ingredient costs like wheat. Critics argue that supermarkets might be retaining profits instead of passing on savings to consumers.
The British Retail Consortium predicts that food inflation will drop to single digits later this year. Several major supermarket chains have recently slashed prices on essential products to address affordability issues. For instance, Sainsbury’s announced a £15 million investment to lower prices of basics such as rice, pasta, and chicken. However, certain items like milk and eggs remain relatively pricier than before the pandemic.
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