By James Davey and Sarah Young
LONDON (Reuters) – British supermarket bosses rejected allegations they were profiteering through a cost of living crisis on Tuesday, telling lawmakers they were not passing on cost rises in full to customers in order to remain competitive.
Soaring food inflation has contributed to the biggest squeeze on living standards in Britain since records began in the 1950s, and has prompted questions about who is responsible for record jumps in grocery bills.
Executives from four of the country’s biggest supermarkets, called to answer questions before lawmakers, said they were juggling the rising cost of wages, energy, commodities and logistics, while needing to stay competitive to prevent customers from going elsewhere.
Asked by one lawmaker about “a grotesque display of profiteering”, Tesco’s commercial director said the group made 4 pence profit for every pound spent, while Sainsbury’s food commercial director said it made less than 3 pence on the same measure, with both executives arguing that did not represent a high profit margin.
Major consumer goods firms such as Unilever and Nestle have profit margins of 16-17%.
“We’re doing absolutely everything we can to keep prices as low for customers as possible,” Sainsbury’s food commercial director Rhian Bartlett told the lower house of parliament’s business and trade committee, which is looking into food and fuel inflation.
Governments across Europe are struggling with high inflation. Earlier this month, the French government secured a pledge from 75 top food companies to cut prices on hundreds of products. Hungary’s government has imposed mandatory price cuts, while Sweden’s competition watchdog is probing possible profiteering.
The supermarket bosses, from market leader Tesco, Sainsbury’s, Asda and Morrisons, argued their industry did not need an intervention because it was already highly competitive.
UK food prices are still rising rapidly but not quite as sharply as in recent months.
Food and drink inflation was running at 18.3% in May according to official data, and 14.6% in June according to industry data.
(Writing by Kate Holton, Editing by Paul Sandle)
