10 May 2023
Supermarkets respond to criticism by passing on savings to consumers
Following Sainsbury’s lead, Tesco, Aldi, and Lidl have all announced price reductions on their own-brand butter and bread, addressing concerns about high supermarket prices. The salted and unsalted butter prices have been cut from £1.99 to £1.89 for 250g packets across these supermarket chains.
While wholesale food prices have been declining globally, UK food inflation is currently at its highest level in 45 years. The recent price cuts aim to address criticism that supermarkets have been slow in passing on the benefits of falling wholesale prices to customers.
Although inflation was expected to drop below 10% last month, soaring food prices resulted in a smaller decline than anticipated. The Office for National Statistics (ONS) acknowledged that while global food price falls should be reflected in supermarkets, the impact has yet to be fully realized.
In March, the union Unite accused certain retailers of exacerbating inflation through excessive profiteering. The British Retail Consortium, an industry body, explained in April that there is typically a lag of three to nine months before wholesale price decreases are reflected in store prices. They assured consumers that prices would gradually decrease in the coming months.
Asda and Morrisons, two prominent supermarket chains, have not yet provided comments on their stance regarding price reductions.
Sainsbury’s has specifically announced a price reduction on some of its own-brand bread, lowering the price from 85p to 75p. The supermarket attributed this adjustment to the declining wholesale prices.
Sainsbury’s stated, “Whenever we are paying less for the products we buy from our suppliers, we will pass those savings on to customers.” This sentiment was echoed by Aldi, which reduced the price of select bread to 75p from 79p. Tesco also cut the price of certain own-brand bread from 85p to 75p. Lidl, on the other hand, reduced the price of certain butter to £1.89 and certain bread to 75p, highlighting that it also offers a loaf priced at 39p.
While the global increase in food prices, exacerbated by the war in Ukraine, has impacted the UK, the country has faced additional challenges, such as Brexit-related red tape and labor shortages. However, as commodity prices begin to fall, supermarkets are gradually reducing prices on select products.
Notably, milk has seen some of the earliest price reductions, with Aldi, Lidl, and Asda joining Sainsbury’s and Tesco in cutting the price of milk by at least 5%. These moves aim to alleviate the burden on consumers and provide some respite amidst the prevailing inflationary pressures.