An inquiry should be commissioned into whether supermarkets have been "profiteering" during the cost of living crisis, the Liberal Democrats have said. Party leader Sir Ed Davey is calling for the competition watchdog to start an investigation into whether food retailers put up the price of goods by more than was necessary to cover the cost of rocketing inflation.
It comes as food prices soared by 15.7% in April - the highest on record - according to the latest BRC-NielsenIQ shop price index. The Lib Dems highlighted Office of National Statistics (ONS) data, which was based on the CPI (Consumer Prices Index) measure of inflation, that suggested UK food inflation currently stands at 19.6%.
Analysis by the party suggests a typical weekly family food shop has increased by £12 as a result, leading to a higher annual bill of more than £600 for the average household. With prices going up, the Lib Dems said the big supermarket chains had made billions of pounds in profits over the past year.
Tesco and Sainsbury's - who account for nearly half the UK's grocery market, according to retail research group Assosia - saw their combined profits rise to £1.5 billion in 2022, a rise of more than 50% on last year, according to Lib Dem number-crunching. The figures, compiled by the House of Commons Library, reflect an increase in profit for the two supermarkets as the UK came out of the Covid pandemic.
But both Tesco and Sainsbury’s recorded a downturn in their profits for 2022/23 as inflation began its rapid upwards trajectory. Last month Tesco reported that pre-tax profit fell from just over £2 billion to about £1 billion in the year to the end of February. Sainsbury’s reported a 5% fall in underlying pre-tax profits to £690 million for the year to March 4.
The Lib Dems want the Competition and Markets Authority (CMA) to probe whether profiteering has taken place among big supermarkets and food multinationals. Sir Ed, who is due to set-out his party's plan for reducing food prices during local election campaign visits on Tuesday, is also pushing for tougher rules to prevent retail giants from raising the price of essentials more than necessary.
The former coalition government cabinet minister said: "Under the Conservatives, the cost of the weekly shop is going through the roof while supermarkets are raking in eye-watering profits. Millions of families risk being overwhelmed by soaring food prices, coming on top of rising bills and housing costs.
"The Conservatives have no plan to deal with this cost of living crisis - instead they're making it so much worse with all their chaos. British farmers will not see any extra income from these soaring food prices. These food prices benefit absolutely no one but the supermarket giants.
"We need to bring soaring food prices back under control and offer relief to families. That means cracking down on profiteering by food multinationals and the big supermarkets so customers get a fair deal."
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The British Retail Consortium (BRC) said businesses were also facing a squeeze with rising bills and costs, but had made attempts to freeze the prices of essential goods. Andrew Opie, the body’s director of food and sustainability, said: “Many supermarkets have seen profits fall in the last year due to the high cost of energy, transport and labour, as well as higher prices paid to food manufacturers and farmers.
“Despite the squeeze on margins, retailers are investing heavily in lower prices for the future. To further help those impacted by the high cost of living, supermarkets have expanded their affordable food ranges, locked the price of many essentials, and continue to offer support to vulnerable groups.
“When cost pressures facing retailers do eventually ease, retail prices will follow fast as they fiercely compete for market share.”
