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Wednesday, May 29, 2024

MPs probe supermarkets on food prices

Britain’s biggest supermarkets have defended their pricing policies during a heated grilling from UK politicians who questioned whether they were profiteering from soaring inflation on groceries.

Executives from Tesco, Asda, Morrisons and Sainsbury’s were all quizzed by the Business and Trade Committee about passing on reductions in wholesale costs, including overheads such as energy, quickly enough.

Committee Chair Darren Jones said all four supermarkets, except Morrisons, had achieved increased profits compared to before the pandemic.

Pointing to Tesco’s profits which jumped from £1.6billion in 2017/18 to £2.03billion in 2021/2022, he asked: “How can it be possible that you are making hundreds of millions of pounds in additional profit?”

Gordon Gafa, Commercial Director for the Packaged division at Tesco, responded by maintaining the company was the “most competitive we have ever been”.

Gafa added Tesco had actually made “seven percent less profit versus our last financial year. It’s important to be clear on that from the outset.”

All four supermarkets stressed profits had tumbled in the past year as they continuously looked to minimise on-shelf increases. Morrisons’ CEO David Potts told MPs profits had dropped by 10 percent in the last six months alone, due to cuts that had brought the company’s prices closer in line with both Aldi and Lidl, than ever before.

Rhian Bartlett, Food Commercial Director at Sainsbury’s, told the committee his company had spent £560 million on keeping prices low for customers. He added: “In the most recent year we made lower profits, at £690 million – input costs are not being fully passed through to our shelf prices.”

Each of the supermarket representatives told the committee they supported a proposed UK-wide “pump watch” transparency scheme, like the model currently used in Northern Ireland, to better advise motorists on wholesale petrol prices versus pump prices.

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