Britain’s biggest supermarkets are facing calls for the UK’s competition watchdog to investigate allegations of gouging amid the cost of living crisis, as industry figures show price inflation Food prices shot up to a record high in April.
With the rising cost of a weekly purchase increasing pressure on households across the country, Liberal Democrat leader Ed Davey has asked the Competition and Markets Authority (CMA) to investigate whether it was producing some kind of speculation between supermarkets and food multinationals.
Government figures show that food and drink prices rose nearly 20% in the year to March, the fastest annual rate since 1977. Analysis by the Libs Democrats showed that the cost of a typical weekly shop has now increased by almost £12, or £604 in the space of one year.
Davey criticized supermarkets for racking up millions of pounds in profit while food inflation has skyrocketed. Big grocery stores have reported a drop in profit in recent weeks, but experts said more could be done to help shoppers struggling with rising prices.
“We need to get the rising food prices back under control and offer relief to families. That means cracking down on profiteering by food multinationals and big supermarkets so that customers get a fair deal,” she said.
The UK’s biggest supermarkets have made billions of pounds in profit between them over the past year, drawing strong criticism from union leaders who say supermarket bosses are cheating customers to profit from the ” greed”, when companies exploit high inflation to generate excessive profits.
The Lib Dems said the CMA should investigate reports that food producers and supermarkets may be unfairly using their market power to inflate their margins and raise prices further. A similar investigation into gasoline prices was launched last year.
Last week, Sainsbury’s announced earnings of £690m for the year to March 4, beating expectations. Chief Executive Simon Roberts said the retailer’s profit margins had fallen from 3.4% to 2.99% amid the impact of rising costs, while arguing he was “absolutely determined to fight the inflation for our clients”.
Tesco posted profits of £753m last year, half the level of the previous year. Ken Murphy, Tesco’s chief executive, said the retailer was “vigorously challenging every cost increase” with suppliers and had not passed on all of its additional costs to shoppers.
The call for an investigation comes as figures from the British Retail Consortium show food price inflation spiked to the highest level on industry records in April. However, analysts said that costs may have peaked and should start to come down in the coming months.
The latest snapshot from the retail industry body showed that food price inflation accelerated to 15.7% in April, up from 15% in March.
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The BRC said ready meals have become more expensive due to the side effect of rising production and packaging costs. Coffee was more expensive due to the high cost of the beans and the main producers exported less.
“Meanwhile, the price of butter and vegetable oils began to decline as retailers shifted cost savings up the supply chain,” said Helen Dickinson, BRC chief executive.
Dickinson said grocery prices should start to come down in the coming months as “wholesale price cuts and other cost pressures trickle in.”
Headline annual store price inflation slowed to 8.8% last month, down slightly from 8.9% in March, helped by spring sales of clothing, footwear and furniture.
Dickinson said: “We should start to see food prices come down in the coming months as wholesale price cuts and other cost pressures filter through. Meanwhile, retailers remain committed to helping their customers and keeping prices as low as possible.”