Britain’s antitrust regulator has cleared the country’s biggest supermarkets of profiteering from high food costs, but said some retailers were not doing enough to allow customers to compare product prices.
The Competition and Markets Authority said that operating profits in the grocery sector fell by 41.5% last year, while average operating margins narrowed from 3.2% to 1.8% as retailers’ costs rose faster than revenues. This indicated that costs have not been passed on in full to consumers, the body said Thursday.
However, the CMA said some retailers did not display prices as clearly as they could, making it hard for shoppers to determine value. For example, some tea bags are priced per 100 grams for some products but per tea bag on others.
“We’re writing to these retailers and warning them to make the necessary changes or risk facing enforcement action,” said Sarah Cardell, chief executive officer of the CMA.
The watchdog is investigating grocers after food prices soared and supermarkets faced accusations of profiteering. Grocers say they are passing on any easing of price pressures to consumers wherever possible. Recent price cuts have included pasta, cooking oils, toilet paper and dairy products.
Speaking in front of Members of Parliament last month, representatives for Tesco Plc, J Sainsbury Plc, Asda and Morrisons highlighted that their profits have declined in the past year as they tried to minimize price increases. Tesco Chief Executive Officer Ken Murphy warned last month that grocery prices are unlikely to return to where they were before Russia’s invasion of Ukraine.
The CMA said it had found missing or incorrectly calculated unit price information in stores and online. For example, a 250ml hand wash costing £1.19, but unit priced at £476 per 100ml. It also said unit price information was difficult to read, with text on labels being too small. Some retailers also do not display any unit prices for products on promotion.
“With so many people struggling to feed their families, it’s vital that we do everything we can to make sure people find the best prices easily,” said Cardell.
She said the CMA is going to do further work to examine competition and prices in 10 specific categories including baby formula, milk, bread, pet food, poultry, mayonnaise, baked beans, chilled desserts, ready meals and lemonade.
On Tuesday, the latest Kantar data showed that grocery inflation eased for a fourth month in a row in the four weeks to July 9 falling 1.6 percentage points to 14.9%.
Read More: Britain’s Food Industry Thinks It’s Over the Worst on Inflation
The CMA report confirms the efficiency of the UK grocery market, said Helen Dickinson, chief executive officer of the British Retail Consortium, adding: “This fierce competition between British supermarkets has also been a key reason why the UK continues to deliver among the cheapest groceries in Europe.”
--With assistance from Katie Linsell.
(Updates with additional information throughout)
