Big supermarket bosses deny profiteering from cost of living crisis

Senior bosses as the UK's biggest supermarkets told MPs they are doing everything they can to reduce prices. Consumer Editor Chris Choi reports

The bosses of the country's biggest supermarkets have denied they are profiteering from the cost of living crisis, telling MPs they are the "most competitive we have ever been".

Senior representatives from Tesco, ASDA, Morrison's and Sainsbury's were grilled by the Business and Trade Committee on Tuesday as customers struggle with record food prices.

Interrogating the executives, committee chair and Labour MP Darren Jones asked Tesco commercial director Gordon Gafa: "Why, given the Covid pandemic, the energy crisis, the increase in cost of your supplies... how is it possible that you are making hundreds of millions of pounds in additional profit?"

Mr Gafa responded: "We have not made more profit year-on-year. We have actually made 7% less profit versus our last financial year. It's important to be clear on that from the outset."

There must be "discrepancies in what we're comparing," Mr Gafa told Mr Jones.

Latest food inflation figures suggest price rises might have reached their peak, with the annual figure falling to 18.4% in May 2023 from 19.1% in April.

Food inflation rates this year have been the highest in more than 45 years, according to the ONS, and food prices are still rising in spite of optimism they could soon fall.

It comes as supermarkets are under increasing pressure to pass on savings they are seeing on wholesale items to their customers, who also include their colleagues.

Sainsbury's told the committee it isn't passing all the costs of inflation in its supply chain to customers, as it was quizzed over whether supermarkets are profiteering amid rampant food inflation.

Rhian Bartlett, food commercial director at Sainsbury's, told the Business and Trade Committee: "We are acutely aware about the cost-of-living impact on our colleagues and how difficult they are all finding it right now.

"We've spent £560 million on keeping prices low, battling inflation and are doing absolutely everything we can to keep prices as low as possible for customers.

"In the most recent year we made lower profits, at £690 million - input costs are not being fully passed through to our shelf prices.

"We've submitted lots of detail on that to the CMA (Competition and Markets Authority) and have had good discussions with the CMA.

"We are inflating behind our input costs and inflating wherever possible behind the market."

Chair of the Business and Trade Committee Darren Jones asks a Tesco executive: 'How can it be possible you are making hundreds of millions of pounds of additional profit?'

Data from the BRC-NielsenIQ Shop Price Index suggests retailers are beginning to pass on lower wholesale costs, with food inflation easing for a second month running.

But the four supermarket bosses being questioned on Tuesday were adamant they are not making huge profits at the same time customers are struggling to meet the cost of living.

Tesco's Mr Gafa said the company makes 4p in every pound, with Sainsburys' Ms Bartlett insisting the supermarket makes less than 3p per pound.

The supermarket is doing "absolutely everything we can", she stressed, to help consumers.

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