// Supermarket bosses have denied profiteering claims and said they have been shielding customers from the full impact of rising costs.
// Tesco exec Gordon Gafa told MPs: “We are the most competitive we have ever been”
Supermarket bosses have denied claims of profiteering from soaring food prices and rejected calls to introduce a grocery price cap.
Executives from Asda, Morrisons, Sainsbury’s and Tesco told MPs on Tuesday that they were shielding customers from the full impact of rising costs.
The grocers were questioned by MPs at the Business and Trade Committee on why prices continued to rise despite wholesale costs starting to fall.
Tesco commercial director Gordon Gafa told MPs: “We are the most competitive we have ever been.”
He insisted the grocer had not been benefiting from rising prices, and said: “We have not made more profit year-on-year, we have actually made 7% less profit versus our last financial year.”
Earlier this year, Tesco’s retail operating profits slipped 6.1% to £2.49bn driven down by market inflation and ongoing investment into its customer offer.
Meanwhile, Sainsbury’s food commercial director Rhian Bartlett pointed out the grocer had spent more than £560m on “keeping prices low”.
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“In the most recent year we made lower profits, at £690m – input costs are not being fully passed through to our shelf prices.”
“We are inflating behind our input costs, and we are inflating – wherever possible – behind the market.”
Similarly, Morrisons chief executive Dave Potts said that the supermarket is “acutely aware of the pressure many millions of people have come under” and that it is “as close now as we have ever been to Aldi and Lidl prices”.
Ministers have been considering introducing voluntary price caps on essential food items, similar to the French model, to bring down prices for consumers.
“We don’t believe price caps would be helpful,” Gafa told the Committee.
Similarly, Bartlett warned of “unintended consequences” by introducing caps.
Bartlett said the industry was already a “fiercely competitive” market, with supermarkets “watching and matching each other’s prices all the time”.
“I’m not sure what price caps would add to that process other than bureaucracy.”
“It can have unintended consequences in selling out and other prices moving up and down, so I think this market self-regulates to a positive extent,” she added.
Meanwhile, MPs quizzed Asda chief commercial officer Kris Comerford about the grocer’s borrowing costs, which surged from £66m in 2018-19 to almost half a billion pounds in 2021-22, and its high debt repayments.
The ownership change has been “factored in”, and Asda is still “investing in the customer offer”, Comerford said.
Tuesday’s committee meeting comes as the Competition and Markets Authority is investigating competition in the grocery sector and whether “any failure is contributing to grocery prices being higher”.
Bartlett said: “We’ve submitted lots of detail on [profits] to the CMA and have had good discussions with the CMA.”
The watchdog is also looking at profiteering from fuel prices, which Potts said was a good move as there was more profit being made in fuel than there had been historically.
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