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Tesco, Sainsbury's and rivals asked to explain high prices Tesco, Sainsbury's and rivals say they are not profiteering
(about 2 hours later)
Supermarket executives are being questioned by MPs over why food prices are still rising as some wholesale costs are falling. Gordon Gafa, Tesco, Kris Comerford, Asda, Rhian Bartlett, Sainsbury's, and David Potts, Morrisons
The UK's biggest grocers - Tesco, Sainsbury's, Asda and Morrisons - are facing a parliamentary committee examining the cost of a weekly shop. Supermarket executives have denied profiteering from the high cost of living, telling MPs the industry is the "most competitive we have ever been".
The price of goods continues to grow but not as steeply as in recent months, according to the latest figures. Bosses from Tesco, Sainsbury's, Asda and Morrisons were grilled on Tuesday over food and fuel prices.
Food inflation reached 14.6% in June, the British Retail Consortium said. The grocers rejected claims of making excess profits and said they were shielding customers from the full impact of rising costs.
That is down from 15.4% in the year to May, but it does not mean prices are falling, just that they are rising at a slower pace. They also backed calls for more transparency on fuel prices.
British Retail Consortium chief executive Helen Dickinson said: "If the current situation continues, food inflation should drop to single digits later this year." MPs on the Business and Trade Committee highlighted that prices for petrol and diesel were lower in Northern Ireland as a result of price data being shared widely with drivers.
They also quizzed the executives over why food prices were still rising, despite some wholesale costs falling.
Food prices rose by 14.6% in the year to June, according to the British Retail Consortium, which represents supermarkets. That was down from 15.4% in the year to May, but it does not mean prices are falling, just that they are rising at a slower pace.
However, food prices remain a key reason why the overall rate of inflation in the UK remains stubbornly high.However, food prices remain a key reason why the overall rate of inflation in the UK remains stubbornly high.
And with many hard-pressed households also facing rising rents or mortgage costs, there is pressure on the supermarkets to defend the high cost of shopping. Jane Hunt, a Conservative MP, said that there were "very few supermarkets" compared to the 1970s and asked executives if they were "in fact a cartel" and were colluding to setting prices.
On Tuesday, MPs will grill senior supermarket bosses about food and fuel price inflation, asking if prices will come down this year. In response, Kris Comerford, chief commercial officer for Asda, said UK retail was "the most competitive market", a sentiment echoed by executives from Sainsbury's and Tesco.
All four supermarket bosses said they did not support a price cap on essential foods, a plan which is being considered by the government.
"I'm not sure what price caps would add to that process, other than bureaucracy," said Sainsbury's food commercial director Rhian Bartlett.
Five hacks to save on your food shopFive hacks to save on your food shop
Why is UK inflation so high?Why is UK inflation so high?
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. Politicians, trades unionists and the governor of the Bank of England have all questioned why supermarket prices have not fallen as rapidly as the wholesale cost of ingredients such as wheat.
They have suggested that retailers may be failing to pass on savings and are banking the profit instead.They have suggested that retailers may be failing to pass on savings and are banking the profit instead.
The Competition and Markets Authority is examining the issue.The Competition and Markets Authority is examining the issue.
Supermarkets deny they are profiteering from high prices and claim their profits are being squeezed. But Helen Dickinson, boss of the British Retail Consortium, said the trade body expected food inflation to drop "to single digits later this year".
The grocers say they are cutting prices where they can, arguing falls in commodity prices take time to filter through to the consumer. Supermarkets have said they are cutting prices where they can, arguing falls in commodity prices take time to filter through to the consumer.
Most of the big chains have recently introduced high profile price cuts to staples, with Sainsbury's on Monday the latest to announce it was investing £15m to reduce the cost of basics such as rice, pasta and chicken.Most of the big chains have recently introduced high profile price cuts to staples, with Sainsbury's on Monday the latest to announce it was investing £15m to reduce the cost of basics such as rice, pasta and chicken.
Tesco, Morrisons, M&S, Aldi and Lidl have all reduced prices on basic foods such as bread, milk and butter in the past few months.Tesco, Morrisons, M&S, Aldi and Lidl have all reduced prices on basic foods such as bread, milk and butter in the past few months.
However, some items such as milk and eggs remain relatively expensive compared to pre-Covid prices.However, some items such as milk and eggs remain relatively expensive compared to pre-Covid prices.
"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," said Rhian Bartlett, food commercial director at Sainsbury's, and one of the executives due to appear before MPs on Tuesday.
As well as pointing to recent price cuts, the executives are likely to tell the committee that not all commodities have been falling in price, said Ged Futter, a retail analyst and former senior buying manager at Asda.
"Yes, prices have come down for some things, but other things have gone up like sugar, potatoes [and] chocolate," he said.
Wheat, which has fallen in price on global markets, is largely supplied from UK growers, and food manufacturers will still be buying last year's crop at last year's prices, Mr Futter said.
"They won't get a new price until they get into a new contract. Just because prices have gone down globally that doesn't mean the price here goes down immediately," he said.
Similarly, cheese sold today has been made with milk bought up to 12 months ago, so won't reflect recent falls in milk prices, he said.
Jamie Keeble, co-founder of sausage and burger maker Heck which supplies most of the major supermarkets, told the BBC's Today programme that the price of pork was expected to remain high for the next 18 months.Jamie Keeble, co-founder of sausage and burger maker Heck which supplies most of the major supermarkets, told the BBC's Today programme that the price of pork was expected to remain high for the next 18 months.
He said the only way supermarkets could lower their prices was by asking suppliers to cut costs, but he added: "We're certainly not in the position to start giving cost decreases on our products.He said the only way supermarkets could lower their prices was by asking suppliers to cut costs, but he added: "We're certainly not in the position to start giving cost decreases on our products.
"At the end of the day, [the supermarkets] are going to have to take a cut in their margins if they really want to lower the prices on the shelf, that's the only way to do it.""At the end of the day, [the supermarkets] are going to have to take a cut in their margins if they really want to lower the prices on the shelf, that's the only way to do it."
The British Retail Consortium has previously said there is typically a three- to nine-month lag for price falls to be reflected in shops. The British Retail Consortium has previously said there is typically a three-to-nine-month lag for price falls to be reflected in shops.
Mr Futter thinks supermarket executives will point to other costs affecting food retail, from rising wages to the added charges related to Brexit, such as veterinary certificates.
A study by academics at the London School of Economics last month found nearly a third of food price inflation since 2019 was due to Brexit.A study by academics at the London School of Economics last month found nearly a third of food price inflation since 2019 was due to Brexit.
How is the price of food changing your diet? You can share your experiences by emailing haveyoursay@bbc.co.uk.How is the price of food changing your diet? You can share your experiences by emailing haveyoursay@bbc.co.uk.
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