Tesco has started to push its suppliers for price cuts in an early sign that inflation is easing, meaning climbing weekly shop costs will start to slow.
The UK’s largest retailer, which has a team monitoring the costs facing suppliers, is keen to start reducing prices for shoppers on certain products where it believes inflationary pressures have eased, as reported by The Sunday Times.
Food inflation hit a 45-year high of 18% in February, above the inflation rate of 10.4%, meaning consumers pay an average of 23% more for a basket of Easter staples than a year ago.
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It comes as Tesco is expected to reveal a drop in profits for the past 12 months, as the supermarket continues to battle rising food and drink inflation.
Tesco chairman John Allan said in January it was “entirely possible” that food producers were taking advantage of the poorest in society by using inflation as an excuse to increase prices beyond what was necessary.
Last month, the supermarket chain faced backlash over its plans to introduce a supplier fee to help cover the rising costs of operating online.
“Tesco are trying to lead the supermarket industry on deflation. They are asking for price reductions — but suppliers want price increases,” director at consultancy firm The Retail Mind, Ged Futter said.
“The pressure on suppliers to decrease prices is going to come thick and fast,” said David Sables, head of supplier consultancy firm Sentinel Management Consultants.
“Supermarket buyers are flagging that they expect prices to be brought down, but it’s early days. Prices won’t drop in a straight line.”
A spokesperson for Tesco added: “We are committed to fair and transparent partnerships with our suppliers, and for seven consecutive years suppliers have voted us No 1 retailer in the independent Advantage survey.
“We are working hard to keep the cost of the weekly shop as affordable as possible,” they said.