The idea UK supermarkets are benefiting unduly from inflation was batted away today (27 June), with four of the country’s major grocers indicating they would not support any moves to introduce price caps.
UK food prices rose 14.6% year on year in June, according to figures released by the British Retail Consortium today. That compared to 15.4% in the year to May.
The rate of inflation provided the backdrop to a hearing convened by the House of Commons Business and Trade Committee at which the UK’s supermarket chiefs were quizzed about pricing and the outlook for consumers.
“There is some fairly structural inflation that is still in the system and doesn’t tend to change as quickly as the more transitory inflation that you see,” Tesco commercial director Gordon Gafa told the committee.
“We make four pence in every pound which I don’t think is any example of profiteering”.
In recent weeks, UK media reports suggested the country’s government was considering implementing price caps for essential items such as bread and milk, an idea from which 10 Downing Street distanced itself.
During the committee hearing, all four grocers rebuffed the idea,
“It’s a very fiercely competitive industry that we work in,” said Sainsbury’s commercial food director Rhian Bartlett.
“We’re generally considered one of the most competitive food markets in the world. I’m not sure what price caps would add to that process, other than bureaucracy. Where we’ve seen them applied in France and so on, it can have unintended consequences of selling out and other prices moving up and down around. So, I think this market self-regulates to a positive extent. We wouldn’t be in support of price caps”, she clarified.
Earlier this month, French food manufacturers agreed to reduce the price of basic items from next month, the country’s finance minister Bruno Le Maire revealed.
Some 75 companies that make 80% of French food, including the likes of Nestlé and Unilever, will reportedly lower prices from July.
Morrisons CEO David Potts added: “I would say competition leads you to the right place, actually.”
