Supermarkets told to make pricing clearer

The Competition and Markets Authority said on Thursday that it had not found any evidence that high food price inflation was being driven by weak competition among retailers.

It pointed to a 41.5% fall in operating profits in the retail grocery sector in 2022/23, while average operating margins fell to 1.8% from 3.2%. “This is due to retailers’ costs increasing faster than their revenues, indicating that rising costs have not been passed on in full to consumers,” the watchdog noted.

The CMA also found that stiff competition, especially from discounters Aldi and Lidl, meant retailers faced losing business it they put prices up too much.

But the body did find compliance concerns with the Price Marking Order among the 11 supermarkets and seven general retailers it had reviewed.

It also noted that some of the problems had stemmed from the unit pricing rules themselves, arguing that they allowed for “unhelpful” inconsistencies with too much scope for interpretation.

Sarah Cardell, chief executive of the CMA, said: “With so many people struggling to feed their families, it’s vital that we do everything we can to make sure people find the best prices easily.

“We’ve found that not all retailers are displaying prices as clearly as they should, which could be hampering people’s ability to compare product prices.

“We’re writing to these retailers and warning them to make the necessary changes, or risk facing enforcement action. The law itself needs to be tightened here, so we are also calling on the government to bring in reforms.”

The CMA launched its investigation into cost of living pressures in the grocery sector earlier this year. The next phase will look at competition and prices across the supply chain for ten specific categories that it has flagged up for further investigation, including baby formula, milk, bread and pet food.