The Competition & Markets Authority (CMA) has today released its findings into whether the supermarkets were treating customers fairly or excessively profiteering from the current cost of living crisis.

With food inflation at record levels reaching 19.2% in March 2023, shoppers have been facing increased prices across the supermarkets as a result of the economic pressures linked to the war in Ukraine, the after-effects of the Coronavirus pandemic and other external factors.

This had led some to assume the supermarkets were inflating their prices voluntarily to capitalise on the market situation however my research and that of the CMA suggests the contrary.

As I reported a few weeks ago, the profit margins of the major supermarkets have fallen in recent years evidencing the fact that the increased costs faced by us all are affecting the supermarkets’ bottom line and they are not hiking prices any more than is needed to cover the costs they are experiencing.

However, although overall profits have not increased, the CMA has found that the UK supermarkets are being rather opaque with their price labelling. Some supermarkets have been employing a rather byzantine system combining metric, imperial and other completely random units – one example of boxes of tea bags showed unit prices were shown for one product per 100g and another per tea bag.

Supermarkets are expected to provide unit price information under the Price Marking Order, however, these regulations are not up to scratch say the watchdog and are enabling the supermarkets to deliberately confuse shoppers and make it harder for them to find the cheapest deal.

Furthermore, the CMA has found supermarkets are not consistently displaying unit prices on products on promotion (most notably Tesco’s ‘Clubcard Prices’ campaign) which is further misleading consumers on the best deal. I have in fact experienced this myself and got my calculator out in the middle of Tesco to find the best price per toilet roll due to the lack of unit price labelling on a promotional display.

This is something the supermarkets are being asked to act on as part of their role as the nation’s grocers to ensure that consumers are able to save money in the cost of living crisis.

In addition, the CMA noted that the market share of the German discounters (Aldi and Lidl) has increased in the past few months suggesting that supermarket customers are incredibly price-sensitive and therefore cannot rise prices without contributing to a fall in demand (high price elasticity of demand).

This leads to the point that the CMA found the rising prices are in no way due to a lack of competition in the grocery market with supermarkets still as eager to undercut each other as ever to try and gain market share.

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