Angry shoppers have accused supermarkets of profiteering, as food prices have continued to soar over recent months.
But now the competition watchdog has ruled that supermarkets are innocent of hiking up prices unreasonably at their customers’ expense.
The Competiton and Markets Authority’s probe into supermarket pricing has found that ‘high food price inflation has not been driven by weak retail competition’.
It said that supermarkets’ thinning profit margins showed they were not profiteering during the cost of living crisis, and it is now shifting its attention to the suppliers that sell food to supermarkets instead.
Confusing: The watchdog found that supermarkets have been guilty of inconsistent and unclear pricing
The watchdog will start by looking at how suppliers set their prices for products including bread, milk, baby formula, mayonnaise and pet food.
This is Money understands that this phase will begin in the Autumn.
Supermarket bosses have already hit out at their suppliers for hiking prices earlier this year, suggesting that their own suppliers are to blame for high food prices not them.
However, the CMA did find that supermarkets have been guilty of inconsistent and unclear pricing.
It highlighted concerns about supermarkets confusing customers by not showing unit prices – how much a particular item costs by weight or volume – or incorrectly calculating this figure.
For example, the watchdog found an example of a 250ml hand wash costing £1.19, which was unit priced at £476 per 100ml.
It also found that unit pricing information was unavailable online until items were selected.
Unit pricing is especially important for shoppers as it helps people identify the best value for money.
Sarah Cardell, chief executive of the CMA said: ‘In the next phase of our work, we will examine competition and prices across the supply chain for the product categories we’ve identified.’
Responding to the CMA report, Helen Dickinson, chief executive of the British Retail Consortium said: ‘We welcome the CMA report which confirms that despite the challenges caused by rising costs throughout the supply chain, the grocery market remains as competitive and efficient as ever.
‘Indeed, retailers have gone above and beyond to try and protect consumers from rising costs in the supply chain, with operating profits falling significantly to below historic levels.
‘As noted in the report, supermarket margins have remained extremely tight as they try to support their customers and absorb the worst of the rising costs in the supply chain.’
What’s been rising the fastest and why?
Consumers have been rocked by soaring inflation across the supermarket shelves, but milk, bread, cheese, eggs, olive oil and sugar have been among the biggest risers.
The most recent inflation figures from the Office for National Statistics showed that the price of junk food in supermarkets like pizza, crisps and chocolate is rising far faster than healthier options, hitting households who want to buy treats for their families.
Soaring: The cost of junk food has soared by up to 60%, new ONS figures reveal, while most other food price rises have started to fall
The price of pizza and quiche has shot up by a whopping 61 per cent, chocolate is up 45 per cent and crisps have risen 9 per cent.
The reason items such as chocolate, jam and syrups are rising is largely due to increasing sugar prices.
Sugar prices are at a 10-year high due to shortages and poor weather in many sugar-growing regions, such as Europe, Brazil and Thailand.
That in turn pushes up the price of food and drinks that use a lot of sugar.
How long will food prices stay high?
Experts think food prices have almost definitely peaked.
But they also think that they will stay above normal levels for the rest of this year at least – meaning inflation will stay high.
Richard Lim, chief executive of consultancy Retail Economics, says: ‘If you look at other periods in history where we’ve seen food inflation, such as the last financial crisis, we saw this exceed 10 per cent. it took about 10 to 11 months for that to fall from its peak to about halfway.
‘The source of today’s inflation is different, but if we use that as a guide, we can expect food price inflation to fall to much more manageable levels by the end of the year, probably half of what it now, or slightly less.’
Alice Haine, personal finance analyst at investment firm Bestinvest, said that ‘food prices are expected to remain high for the rest of the year, with grocery bills set to take over from energy prices as the leading factor in the cost-of-living crisis’.