How the most hard-up shoppers are worst hit – as supermarkets hike prices of their cheapest grocery ranges
POORER families are being hit the hardest because supermarkets are hiking the price of their cheapest grocery ranges faster than other products, The Sun on Sunday can reveal.
Analysis for us by consumer group Which? shows the cheapest budget ranges were up by 25 per cent last month compared to a year ago
But branded products such as Kellogg’s corn flakes and Heinz baked beans, have only risen an average 13.8 per cent, and the prices of supermarket own ranges are up by 20.2 per cent.
Many low-income households were buying Tesco’s, Sainsbury’s, Morrisons’ and Asda’s budget ranges to save cash even before the cost of living crisis — and sales are now up 46 per cent year-on-year, according to recent figures by data company Kantar.
But those ranges have jumped in price, and cheaper options are not available, meaning that squeezed shoppers are having to take food items out of their trolleys and buy less because they cannot afford it.
Sue Davies, Which? head of food policy, said: “This food inflation crisis is causing misery for millions around the country.
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“They have told us they have had to skip meals or use food banks just to cope at a time when some supermarkets have still managed to turn a healthy profit.”
Last week the Bank of England blamed rocketing food prices for causing higher inflation to last longer than it had expected.
It said food producers are being slow to pass on falling wholesale prices to shoppers.
But one senior supermarket source said the jump in energy prices, ingredients and wages had taken longer to feed through into the food industry than other areas.
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He said: “It can take between three and nine months from wholesale prices falling to the customer seeing that change because of the gap between when goods are ordered and the time it takes to produce and transport them to shelves.
“Many of the essential products in value ranges, such as dairy, bread and pasta, had been heavily exposed to the biggest jump in prices from soaring wheat costs and the amount of energy and labour they take in the processing.”
For example, Sainsbury’s cheapest range of spaghetti, Hubbard’s Foodstore Spaghetti, is 56p for 1kg, compared to £1.90 per kilo for its own brand, but branded Napolina Spaghetti is £2.50 per kilo.
All three will have faced roughly the same level of cost increases for energy, ingredients and wages, but they make up a bigger chunk of the overall price of what it costs to make the cheapest products.
As a result, industry experts say value ranges have been more affected by inflation.
Clive Black, analyst at investment group Shore Capital, says: “The current spike in British food prices reflects several factors. Some is the working through of higher commodity prices, particularly following the invasion by Russia of Ukraine.
“With supply contracts and the like, it can take several quarters for elevated input prices to be recovered, so once prices peak there is a similar time frame for those at the retail level to come down.”
The concern that big producers and supermarkets are profiteering from the cost-of-living crisis has put the food industry under the spotlight.
On Tuesday PM Rishi Sunak will hold a “food summit” to try to tackle soaring prices.
He will meet supermarket chiefs, ministers from the Department for Environment, Food and Rural Affairs, and representatives from the National Farmers’ Union, the Food And Drink Federation and the British Retail Consortium.
Sun columnist and farmer Jeremy Clarkson, who highlighted how red tape has made running a food business tough through his Clarkson’s Farm TV show, will also be present.
Soaring food prices have even led for a call from the Liberal Democrats for a competition inquiry into the supermarkets.
In France, retailers have bowed to government pressure to cap many food prices, at the expense of their profit margins, to offer the lowest possible prices in an effort to help households cope.
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Supermarkets highlight the fact that Tesco’s and Sainsbury’s recent financial results show that their profit margins have fallen over the past year and that they have already started lowering the price of some items such as milk, bread and butter to reflect falling wholesale prices.
But those staples are still much more expensive than a year ago and are unlikely to fall back to being as cheap as they were any time soon.
