Supermarkets to be quizzed by MPs amid pressure to pass on wholesale cuts
The latest figures from the BRC-NielsenIQ Shop Price Index show food price inflation still rising, but at a slower pace for the second month running.
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Your support makes all the difference.Supermarket senior executives are being questioned by MPs on Tuesday over eye-watering food inflation as the latest figures add to hopes that price hikes have passed the peak.
Food bosses at four of the UK’s biggest supermarket chains – Tesco, Sainsbury’s, Asda and Morrisons – are appearing in front of the Business and Trade Committee on Tuesday to discuss food price inflation and why prices are still rising when commodity and wholesale costs are dropping.
It comes as supermarkets are under increasing pressure to hand down savings they are seeing on wholesale items to consumers, who have faced punishing food price inflation in recent months.
If the current situation continues, food inflation should drop to single digits later this year
Data from the BRC-NielsenIQ Shop Price Index suggested retailers are beginning to pass on lower wholesale costs, with food inflation easing for a second month running as supermarkets cut the price of household staples.
Food inflation decelerated to 14.6% in June, a relatively significant drop from May’s 15.4% and below the three-month average of 15.2%.
Fresh food inflation saw a significant slowing from May’s 17.2% to 15.7% as retailers dropped the prices of staples including milk, cheese and eggs.
Shop price inflation overall slowed to 8.4% in June, down from 9% in May and below the three-month average of 8.7%, according to the figures.
Clothing and electrical goods also saw falling prices amid inflation on items other than food slowing to 5.4% from 5.8% last month, helping customers to pick up a bargain ahead of the summer holidays.
British Retail Consortium (BRC) chief executive Helen Dickinson said: “Households up and down the country will welcome the easing of shop price inflation in June.
“If the current situation continues, food inflation should drop to single digits later this year.
“However, it is imperative that Government does not hamper this progress by introducing costly new policies. Reforms to the packaging levy and a new deposit return scheme could create an additional £4 billion burden on retailers and their customers.
“Along with a rise in business rates, and the introduction of border controls in October, these policies could hinder the Government’s efforts to combat inflation.”
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Whilst prices are still higher than a year ago, the slowdown in food inflation is welcome news for shoppers, helped by supermarkets lowering prices of some staple goods.
“And if global supply chain costs continue to fall, we may now be past the peak of price increases.
“However, with most households needing to save money, purchasing behaviour for the rest of this year is still likely to shift towards essential needs with discretionary consumption being de-prioritised or delayed.”
But food price inflation needs to fall substantially further to help rein in higher than expected overall UK inflation, which is still running at 8.7%.
The Bank of England last week lifted interest rates to 5% with a bigger than expected 50 basis point hike to try to tame rising prices.
The Bank suggested that some retailers were jacking up prices or failing to pass on lower costs to consumers as a way of increasing their profit margins at a time of stubborn inflation.
Chancellor Jeremy Hunt is to meet the Competition and Markets Authority (CMA) and the watchdogs for the energy, water and communications sectors on Wednesday to ask whether there is a profiteering problem in their sectors and what they are doing about it.
Ministers are also talking to the food industry about “potential measures to ease the pressure on consumers”, Mr Hunt has confirmed.