The UK’s competition watchdog has said it is reviewing the role that competition failures could be playing in the hike of grocery prices during the cost-of-living crisis.

The Competition and Markets Authority (CMA) said that while global factors like the Russia-Ukraine war and supply chain issues have been the main driver of grocery price increases, it wants to make sure that weak competition is not adding to these problems.

“Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market,” said the regulator.

The move builds on ongoing work by the CMA, which has been looking at how well markets in essential goods and services are working as cost-of-living pressures mount. The organisation has also been exploring unit pricing practices online and in-store.

The authority said that as part of its new investigation it would identify which product categories, if any, might need closer examination across the supply chain.

Which? head of food policy Sue Davies welcomed the investigation, saying that it was right for the CMA to hold firms to account during the cost-of-living crisis by "reviewing whether consumers are paying unfair prices for groceries".

“Although food supply chains have been facing several pressures and a whole range of factors affect the final food price, consumers must not be forced to pay a higher price for food unnecessarily," she added.

Road fuel

While the CMA has thus far found no evidence of specific competition concerns when it comes to groceries, it said that higher petrol prices cannot solely be attributed to factors "outside the control of the retailers".

The CMA has found evidence that fuel margins have been growing across the retail market, particularly for supermarkets, over the past four years.

Because of these increasing margins, average 2022 supermarket pump prices were five pence per litre more expensive than they would have been had their average percentage margins remained at 2019 levels.

"Although much of the pressure on pump prices is down to global factors including Russia’s invasion of Ukraine, we have found evidence that suggests weakening retail competition is contributing to higher prices for drivers at the pumps," said Sarah Cardell, chief executive of the CMA.

The chief exec also said that it was not satisfied that all UK supermarkets had been forthcoming with the evidence they had provided so far for its Road Fuel Market study which it began last year. Cardell said the regulator plans to bring in representatives from supermarkets for formal interviews to "get to the bottom of what is going on".

Share Story: