Britain’s biggest supermarkets almost doubled their profits on the back of spiralling prices during the cost of living crisis, it is claimed.
Details emerged in Parliament where MPs challenged industry leaders to do more to help struggling customers.
MPs pointed out that supermarkets enjoyed a 97 percent profits bonanza in a year when food price inflation peaked at 19.1 percent.
And they pointed out that while the rate of increase has come down sharply, grocery prices continue to rise at four per cent a year.
The also challenged the stores over other “tricks of the trade” that have protected their profits, including the rise of shrinkflation and cutting the amount of expensive ingredients in products.
MPs on the House of Commons EFRA Select Committee, who are investigating price fairness, questioned executives from Tesco, Sainsbury’s, Asda, Lidl and Waitrose yesterday.
They pointed to evidence from the consumer champion Which? whose surveys show millions are worried about prices or have been forced to skip meals.
And one MP suggested that a record rise in shoplifting has been – at least partly – driven by the fact essentials, such as baby formula, are too expensive.
Separately, farmers have told MPs during earlier hearings that they have been hammered by supermarkets which have failed to pay them a fair price that reflects higher costs.
During questioning of the supermarket executives, Labour MP, Barry Gardiner, said: “Which? reports that 79 per cent of customers are extremely worried about food price inflation.
“They said one in five households are going without some foods and 13 per cent of households have skipped meals.
“In March 2023, the annual rate of food price inflation was the highest it had been for 45 years … 19.1 per cent.
“This year on top of that there has been a further increase of 4 per cent. Prices keep on going up.”
Against that background, he questioned whether supermarkets are doing as much as they could to help shoppers.
The MP pointed out: “We have evidence … that shows that certainly the top three supermarkets … in the post pandemic years showed a 97 per cent rise in their profits.”
Last year alone, Tesco made £2.3 billion with £701m posted by Sainsbury’s and £1.1 bn for Asda.
Questioning a Tesco executive giving evidence to the EFRA Select committee, Mr Gardiner, said: “You have seen a very large rise in profitability this year to £2.3 billion – up from the previous year by £882m.
“Is there more you could be doing to help the 79 percent of customers who are worried about putting food on the table?”
Labour MP, Ian Byrne, suggested the high cost of food is driving normally law-abiding people to steal from stores.
He asked: “Do we need to be thinking about price controls on essential items like baby formula milk?”
The Competition & Markets Authority is currently investigating the baby formula market and evidence manufacturers have increased profit margins.
Sainsbury’s executive Rhian Bartlett, who is Chief Food Commercial Officer, confirmed shoplifting does rise during tough times, saying: “We do see over multiple decades that shoplifting moves up and down with economic progress.
“I would say (there is a link there) as people feel under more financial pressure.”
On profits she said Sainsbury’s had seen a £1 billion increase in cost prices last year and is making a modest profit of 3p for every £1 spent.
Miss Bartlett said: “We have been working really hard to try and manage the cost of living crisis on their (customers) behalf as best as we can.”
Commercial Director for Fresh Food at Tesco, Dom Morrey, claimed accounting measures which impact the way Britain’s biggest retailer presents its finances had inflated the chain’s profits.
He accepted customers had faced ‘challenges’, but he defended Tesco saying: “We have reduced the price of over 4,000 items in the past year by an average of 12 per cent.”
He insisted the company has been ‘doing the right thing’ by cutting prices where it can, supporting suppliers and paying staff.
MPs also challenged the supermarkets on other ‘tricks of the trade’ that have protected their profits while leaving customers worse off.
Conservative MP Sheryll Murray raised concerns about shrinkflation with, for example, packs of potatoes have recently been reduced from 2.5kg to 2kg across most stores without a price cut. She asked whether stores should do more to label these changes.
The MP also highlighted reductions in the amount of expensive ingredients such as chicken, beef and pork in ready meals. The stores claimed these are sometimes due to recipe changes and improvements.
And Labour’s Rosie Duffield questioned the use of fake farm names by some stores, particularly Tesco, to label its produce and meat.
Sue Davies, Which? Head of Food Policy, said: “Our research has found that one in eight households are skipping meals as the cost of food crisis continues to bite, so it’s important supermarkets are doing everything they can to support their customers.
“Supermarkets and manufacturers must be more upfront with consumers by making sure that any changes in the size or ingredients of popular products are clear, and by ensuring that unit pricing is prominent, legible and consistent in-store and online so that shoppers can easily compare prices across different brands and pack sizes.”
