Supermarket bosses rejects calls for price caps and deny ‘grotesque profiteering’

Supermarket bosses have rejected calls for price caps on products and denied claims of “grotesque profiteering” during a grilling by MPs.

Executives from four of Britain’s biggest grocers were quizzed over rising prices and whether they are using inflation as an excuse to boost their profits.

They were also asked about the potential for price caps on some foods to help protect shoppers from spiralling costs.

But bosses from Tesco, Sainsbury’s, Asda and Morrisons mounted a staunch defence of the sector, insisting it remained “fiercely competitive”.

The representatives said they have not passed on all the costs of supply chain inflation to their customers, absorbing some of the shock in a hit to their own profits.

It comes as supermarkets are under increasing pressure to hand down savings on wholesale items to consumers, who have faced punishing food price inflation in recent months.

Tesco commercial director Gordon Gafa was asked about a suggestion from Unite union general secretary Sharon Graham that supermarkets were guilty of a “grotesque display of profiteering” – a claim he denied.

And he claimed Tesco, the UK’s largest grocer, is the “most competitive we have ever been”.

Mr Gafa told the Business and Trade Committee: “Profits year-on-year for the group are down, we have sold more year on year and we have made less.”

Sainsbury’s food commercial director Rhian Bartlett said the supermarket has spent £560m to lower prices for customers. “In the most recent year we made lower profits, at £690m – input costs are not being fully passed through to our shelf prices,” she said.

Quizzed on speculation about a food price cap for certain products, Ms Bartlett said: “This is fiercely competitive as a market.

“We’re generally considered one of the most competitive food markets in the world. I’m not sure what price caps would add to that process, other than bureaucracy.

“Where we’ve seen them applied in France and so on it can have unintended consequences – of selling out and other prices moving up and down around.

“So I think this market self-regulates to a positive extent.”

On Wednesday, Jeremy Hunt will pile pressure on regulators to probe whether firms are exploiting rampant inflation to bolster their profits.

The competition watchdog is already investigating the grocery sector amid “ongoing concerns about high prices” and is looking at whether increases are linked to “any failure in competition”.

Data from the BRC-NielsenIQ Shop Price Index suggests 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.

The rate of food inflation decelerated to 14.6 per cent in June, a relatively significant drop from May’s 15.4 per cent and below the three-month average of 15.2 per cent. But costs remains high overall.

Fresh food inflation saw a significant slowing from May’s 17.2 per cent to 15.7 per cent as shops dropped the prices of basics including milk, cheese and eggs.

The grocers were also challenged over petrol prices and suggestions consumers did not feel the benefit of then-chancellor Rishi Sunak’s 5p fuel duty cut last March.

Morrisons boss David Potts said the supermarket passed on the cut “on the same day”, but suggested customers may not have benefited because of “the volatility within the market”.

Tesco, Sainsbury’s, Asda each suggested they would back a Northern Ireland-style system to allow customers to check fuel prices at every petrol station online.

Mr Potts said he would be happy to look at “anything that can benefit consumers”.