Supermarket executives in the UK have denied making too much money from soaring prices, stating that the industry is the “most competitive it’s ever been.” 

Bosses from Tesco, Sainsbury’s, Asda and Morrisons, four of the leading UK supermarket chains, have been questioned over high food prices. 

Earlier this week, Food Ingredients First reported that MPs would quiz senior representatives from the supermarkets about when food prices will likely decline significantly. They also faced questions over competition in the supply chain and profit margins over this period. 

Jeremy Hunt said the “action plan” agreed to support consumers would “ensure they are treated fairly” amid concerns over greedflation – companies using rampant inflation as a cover to hike prices and boost profit margins.

The supermarkets have debunked the theory that they are making excess profits and said they “are shielding customers from the full impact of rising costs.”

Food prices rose by 14.6% in the year to June, according to the British Retail Consortium (BRC), 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.

Higher grocery prices remain a key reason why the overall inflation rate in the UK remains stubbornly high. 

UK food inflation has been exceptionally high for certain types of food (oils and fats, milk, eggs, cheese and yogurt; and ready meals and sauces) and lower for others (such as fruit and fish).

This comes amid reports that the UK had two consecutive months of declining food inflation for the first time since the start of the Ukraine war. According to The Office for National Statistics, May’s food inflation fell 18.3% from 19% in April.

Chairman Darren Jones said that all four supermarkets, except for Morrisons, had made increased profits compared to before the COVID-19 pandemic.

UK food inflation has been exceptionally high for certain types of food, like milk and eggs.Jones said he had heard of Asda employees recently visiting food banks to collect donations of food they had stacked in their own supermarket because “they cannot make ends meet.”

But the supermarkets said they all paid the National Living Wage or above and argued they were doing all they could to protect customers from higher costs from increased energy, labor and commodity prices.

Jane Hunt, a Conservative MP, asked executives if they were “a cartel” and were conspiring to set prices.

In response, Kris Comerford, chief commercial officer for Asda, said UK retail was “the most competitive market,” a sentiment echoed by Sainsbury’s and Tesco.

All four supermarket bosses said they did not support a price cap on essential foods, an idea that had been considered by the government but was never formally proposed.

UK inflation at all-time high
Politicians, trades unioists 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.

Supermarkets had previously said they had cut prices when possible and added that falls in wholesale costs take time, typically three to nine months, to filter through to the shelves.

Dickinson from the BRC said the trade body expected food inflation to dro “to single digits later this year.”

Most of the big chains have recently introduced price cuts to staples, with Sainsbury’s becoming the latest retailer to announce it was investing £15 million (US$18.9 million) to reduce the cost of basics such as rice, pasta and chicken.

Last week, UK Prime Minister Rishi Sunak said that weekly shopping bills had “gone up far too much in the past few months” and explained how “we’re looking at the supermarkets, making sure that they’re behaving responsibly and fairly when it comes to pricing all those products.”

But in the same week, Sunak came in for criticism after he postponed the two-for-one ban on junk food until 2025 in England. The critical component of the anti-obesity strategy was initially planned for this October but has been deferred by two years while the cost of living crisis continues to bite.