Supermarket food prices surged by more than 25% between 2021 and 2023, according to a report by consumer group Which?
The substantial increase in prices strengthens the case for retailers to be required to display comprehensive price information on loyalty card offers and promotions, enabling shoppers to find the best deals.
Go deeper with GlobalData
Which? has called for the government to address loopholes that lead to “confusing and inconsistent” pricing practices in some supermarkets.
In June 2023, Tesco was reported to the UK’s competition watchdog by Which? for not providing unit prices, such as the price per 100 grams or 100 millilitres, for its loyalty card offers, which it uses as a sales tactic.
The absence of unit prices makes it challenging for Tesco shoppers to compare the value for money across various package sizes, bottles, and brands. In contrast, rival supermarket Sainsbury’s includes unit prices in its Nectar deals.
Head of food policy at Which? Sue Davies expressed concern over the impact of continuously rising food prices on households.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataShe criticised the confusing and inconsistent pricing practices of some supermarkets, which make it incredibly difficult for consumers to identify the best value products.
Inflation data and food and drink inflation rates
On Wednesday, 19 June 2023, the Office for National Statistics is scheduled to release inflation data for the month. It is expected to show a slight decrease in the headline rate, down to 8.2% from May’s 8.7%.
However, the rate remains significantly higher than the Bank of England’s 2% target.
Based on the prices of 25,000 products across eight supermarkets, the latest Which? tracker indicates that food and drink inflation stood at 15.4% in the 12 months leading up to June 2023, down from 16.5% in May.
Lidl recorded the highest inflation rate at 21.4%, followed by Aldi at 19.3%. Taken over the most recent two-year period, both Aldi and Lidl experienced inflation rates of approximately 35%.
However, analysts argue that these inflation readings do not account for the discounters’ lower starting prices. Data from grocery analyst Kantar reveals that Aldi’s average unit price increased by 19p, compared to the market average of 22p.
Retailers’ efforts and call for action
Helen Dickinson, the chief executive of the British Retail Consortium, acknowledged that retailers have made efforts to absorb cost increases during a period of high inflation affecting energy, labour, commodities, farming and transport.
She highlighted recent price reductions in key staples like butter and bread, attributing them to fierce competition among retailers, which benefits customers seeking better value in their grocery shopping.
The need for action on unit pricing is being raised ahead of the Competition and Markets Authority’s (CMA) upcoming update on its investigation into the matter. The CMA will share the latest findings from a separate review of grocery pricing, amid accusations of “greedflation” in the food industry.
In the spring of 2023, the CMA announced its intention to revisit unit pricing. It had previously conducted an investigation in 2015, which resulted in recommendations for the government to review and clarify the legal requirements.
However, no concrete action was taken.
A new study by Which? reveals that the provision of unit pricing can often be confusing due to outdated rules known as the price marking order, which are nearly 20 years old.
Retailers interpret these rules differently, leading to discrepancies.
Davies emphasised the urgent need to update the guidance to clearly define how unit pricing should be provided for promotions, including loyalty card pricing.
Transparent and clear pricing is crucial as people strive to cope with the cost of living crisis.
Tesco’s response and future plans
Following the criticism from Which?, Jason Tarry, the CEO of Tesco UK, stated in a recent blog post that the company will expedite planned improvements to its Clubcard prices.
These changes will make it easier for customers to see the weight or volume-based competitiveness of offers. Tesco also intends to introduce unit pricing for simple promotions by early 2024.
