Three quarters of branded suppliers in products such as baked beans, mayonnaise and pet food have pushed up prices by more than their costs increased, the Competition and Markets Authority (CMA) has found.
In doing so, these branded suppliers “have contributed to higher food price inflation”.
In an ongoing review of the grocery sector, the watchdog analysed 10 product categories to see if shoppers have been overcharged for items during the cost-of-living crisis.
The CMA found that while there is evidence of profiteering, in most cases there are cheaper own-label alternatives available.
In most cases, as food prices have risen, many consumers have switched away from brands which it explained has led to a decline in brands’ market share and profits.
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The CMA said this is positive for competition as it hopes the prices of branded items will lower.
Leading brands told the watchdog that they are aiming to use any future reductions in their input costs to offer customers more promotions rather than cut the standard price they charge supermarkets for their products.
While there are own-label alternatives in the majority of these categories, the CMA said that there is little evidence of consumers switching to cheaper baby formula products, with limited numbers of own-label alternatives.
The prices for baby formula in the UK have risen 25% over the past two years and evidence suggests that branded suppliers of baby formula have also increased their prices by more than their input costs.
CMA chief executive Sarah Cardell said: “We’re concerned that parents may not always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices.
“We will investigate this further and consider whether changes to regulations are necessary to ensure parents can get the best deal possible.”
The CMA is also concerned that cheaper prices are only available for loyalty card members at some supermarkets.
Cardell added that “this raises a number of questions,” with a review set to launch in January 2024.
