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Supermarket executives, including those from Tesco, Sainsbury’s, Asda, and Morrisons, have denied accusations of excessive profits amidst soaring prices. During a session with MPs on the Business and Trade Committee, the executives emphasized that the industry is currently experiencing intense competition, contrary to claims of making unjustified gains.
The Competition and Markets Authority is currently investigating the level of food and fuel prices to determine whether insufficient competition has resulted in customers overpaying. MPs questioned supermarket bosses about the continuous rise in food prices, even though wholesale costs have decreased in some cases.
According to the British Retail Consortium (BRC), food prices in the UK increased by 14.6% in the year leading up to June, a slight decrease from the 15.4% rise in the previous year. Despite this decrease in the rate of increase, grocery prices remain a significant factor contributing to the UK’s persistently high inflation.
Darren Jones, the committee chairman, pointed out that all supermarkets, except Morrisons, reported increased profits compared to pre-pandemic levels. He also highlighted instances of Asda employees resorting to food banks due to financial difficulties. However, the supermarket executives countered these claims by asserting that they pay at least the National Living Wage and are actively working to shield customers from rising costs from energy, labor, and commodity prices.
https://t.co/r9wT97jMkY How much profit are UK supermarkets making amid the cost crisis? https://t.co/IutULGqiYG
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In response to an inquiry about collusion and price-setting, the Asda, Sainsbury’s, and Tesco executives emphasized that the UK retail market is highly competitive. They denied allegations of being a cartel and stated that they did not support implementing price caps on essential foods, a proposal that had been considered but never formally suggested by the government.
Various politicians, trade unionists, and the governor of the Bank of England have expressed concerns over the slow decline in supermarket prices compared to the reduction in wholesale ingredient costs, such as wheat. Critics argue that supermarkets may retain profits instead of passing on savings to consumers.
The British Retail Consortium anticipates that food inflation will decrease to single digits later this year. Several major supermarket chains have recently introduced price cuts on staple products to address affordability concerns. Sainsbury’s, for example, announced an investment of £15 million to reduce the cost of basics such as rice, pasta, and chicken. However, certain items like milk and eggs remain relatively expensive compared to pre-pandemic prices.
