Britain’s biggest supermarkets said they are keeping food prices as low as possible in response to questions from UK politicians on whether they’re profiteering from rampant inflation on groceries.
Representatives from Tesco Plc, J Sainsbury Plc, Asda and Morrisons were asked whether they have been “behaving” in their pricing for cash-strapped shoppers, by politicians on the House of Commons Business and Trade committee on Tuesday. All the supermarkets highlighted that their profits have declined in the past year as they have tried to minimize price increases.
“We are acutely aware of the pressure that many millions of ordinary people have come under as a result of this cost-of-living crisis and food inflation in particular,” said David Potts, Chief Executive Officer of Morrisons.
Supermarkets are in the political spotlight as food emerges as a larger contribution to inflation than energy. The consumer prices index rose the same amount in May as the previous month, surprising markets and leading to a larger-than-expected Bank of England rate rise last week.
Grocers have been passing on some price cuts in recent weeks including in staples like milk, bread and butter. Those measures led to food price inflation falling for a second month to 14.6%, according to the British Retail Consortium. That’s still well above the average inflation in shops at 8.4%.
Read More: Inflation Falls in UK Shops After Hitting Record Last Month
“We are inflating behind our input costs,” said Rhian Bartlett, food commercial director at Sainsbury.
Asda is still lowering prices despite higher debt payments after its takeover by the billionaire Issa brothers and TDR Capital, said Kris Comerford, chief commercial officer at Asda.
Earlier this week Sainsbury unveiled plans to make £15 million ($19 million) worth of price cuts on household staples including pasta, rice and cornflakes while Aldi lowered the price of toilet roll by 24 pence. Marks & Spencer Group Plc reduced prices on more than 70 items earlier in June, while Morrisons announced its sixth round of price cuts this year, costing the retailer £26 million.
Read More: Waitrose Cuts Price of 200 Products Even as Inflation Persists
Inflation is proving particularly sticky in the UK, remaining above more than four times the target rate for the past 14 months. That’s putting at risk Prime Minister Rishi Sunak’s promise to halve inflation this year, one of his five core pledges to voters.
On Wednesday, Chancellor of the Exchequer Jeremy Hunt will meet with regulators of key industries – including the Competition and Markets Authority — to ensure they’re doing what they can to ease the pressure of higher prices on ordinary Britons.
The government has reportedly already abandoned plans for voluntary price caps on groceries after broad opposition from the industry. M&S chairman Archie Norman called the idea “harebrained” while Stuart Rose, chairman of Asda, said interventions would be “clumsy.”
--With assistance from Joe Mayes.
