The Competition and Markets Authority (CMA) has found no evidence of weak competition behind grocery inflation, as the British Retail Consortium (BRC) said the findings show retailers are ensuring “customers are the big winners”.
The verdict comes as the CMA today (26 July) published an updated outcome following its report on competition, inflation and rising prices in the UK grocery industry.
The industry watchdog said its findings do not show evidence that grocery inflation is being driven at an aggregate level by weak competition between retailers.
It added that while this should provide consumers with “reassurance” that pressure is still being applied to retailers to ensure effective competition, it recognises that the prices of groceries for shoppers have still increased regardless and are “likely to remain elevated”.
It also noted that “not everyone benefits in the same way from competition between retailers”, pointing to examples such as discounters like Aldi and Lidl not offering online shopping, or prices being traditionally lower in larger stores than convenience branches, restricting accessibility for some consumers.
Responding to the CMA report, BRC chief executive Helen Dickinson said: “We welcome the CMA update, which once again shows that supermarkets are doing their best to provide great value groceries for their customers.
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“With food inflation now returned to normal levels, fierce competition between retailers is ensuring customers are the big winners from the UK’s supermarket sector.”
The latest update on the CMA’s ‘Competition, choice and rising prices in groceries’ investigation, follow the report’s findings which were first published in July 2023.
Here, the regulatory body noted retailers were looking to increase grocery profit margins above the “historically low levels” seen in the financial year 2022/23.
It also found a fall in operating profits and average operating margins in this time period, indicating that grocery retailers had indeed “not ‘passed through’ to consumers all of the cost increases that they had incurred.”
The CMA said: “Overall, we didn’t find widespread evidence of weak competition: profit margins were historically low; consumers were switching to get the best deals; and the lowest-price retailers were gaining market share from others.”
The latest update on its report comes amid the CMA’s ongoing inquiry into loyalty pricing and market study on infant formula, with the conclusions of the two reports due in November and the autumn, respectively.
