Chancellor Jeremy Hunt is set to meet with consumer watchdogs on Wednesday amid concerns that some retailers have been raising prices to boost profits during the current period of high inflation.
Retailers will face questions about failing to pass on lower costs to consumers, as Hunt meets with the Competition and Markets Authority (CMA), energy regulator Ofgem, water regulator Ofwat, and communications regulator Ofcom.
He is expected to discuss how the regulatory bodies can help curb inflation.
The historically high level inflation has proven more stubborn than expected, remaining at 8.7 percent in May, despite forecasts of a fall to 8.4 percent.
The government has vowed to help British families and “squeeze every last drop of high inflation out of the economy,” it said on Twitter.
Whitehall is working “directly with food producers, supermarkets, and the competition regulator to work out what can be done to bring down prices,” Hunt said on Twitter.
Speaking in Kent last week, Prime Minister Rishi Sunak told workers that their weekly shop “has gone up far too much in the past few months especially.”
“We’re looking at the supermarkets, making sure that they’re behaving responsibly and fairly when it comes to pricing all those products, to make sure that we’re easing the burdens on your weekly shop,” the prime minister added.
Heads of UK supermarket giants including Sainsbury’s, Morrisons, Asda, and Tesco, appeared before MPs on Tuesday to discuss food and fuel price inflation.
One accusation, voiced by committee Chair Darren Jones, was that supermarkets have been making increased profits and not doing enough to keep food prices down.
Tesco Commercial Director Gordon Gafa told MPs the company is the “most competitive we have ever been.” He added that Tesco hasn’t made additional profits year on year.
Asda’s Chief Commercial Officer Kris Comerford said the supermarket has been launching food offers and rewards programmes, and locking prices on some produce to help consumers.
When asked about increased profits, Sainsbury’s Food Commercial Director Rhian Bartlett said the company had spent £560 million on keeping prices low.
“In the most recent year we made lower profits, at £690 million, input costs are not being fully passed through to our shelf prices. We’ve submitted lots of detail on that to the CMA and have had good discussions with the CMA. We are inflating behind our input costs and inflating wherever possible behind the market,” Bartlett told the committee.
Questioned over the volatility in the fuel market since the war in Ukraine, Morrisons Chief Executive David Potts agreed with the CMA estimation that supermarkets were profiting more from high fuel prices.
“There is a bit more profit at the retail end,” Potts said.
Speaking about the impact of inflation on prices, Hunt said last week that high gas prices feed through to high food prices.
“Because the price of gas and agricultural products like wheat are agreed in advance, there’s a delay when wholesale gas prices drop before lower prices reach consumers,” the chancellor added.
Questioned in Parliament by Labour MP lan Byrne about introducing price caps to essential foods to help eradicate poverty, Hunt said that capping prices was not “the right long-term solution.”
Labour has been critical of the Conservative Party for “crashing the economy” and argued that food prices in the UK have been rising faster than in other G-7 countries.
