Supermarket bosses, including Morrisons CEO David Potts, will be questioned by MPs on Tuesday over profiteering concerns amid rising food prices.
The business committee is set to scrutinise the gross profits of the big supermarket chains, including Tesco, Sainsbury’s, Asda and Morrisons, and delve into how they break out UK business performance from their groups, and how they separate fuel margins compared to that in groceries, according to The Sunday Times.
Grocery bosses have spoken out to deny claims of profiteering over the past month.
Asda chair Lord Rose pointed out that profits from the big supermarkets have fallen over the past year and said the government “owe us a debt of gratitude”.
Tesco CEO Ken Murphy concurred and said earlier this month: “As an industry, we’ve worked really hard on efficiency and yet our operating margins are falling, despite really strong top line sales growth. That can only be attributed to the fact that we’re investing really, really heavily in value.”
Murphy insisted that Tesco was passing deflation down to customers, pointing out bread and pasta were 12% and 16% cheaper respectively month-on-month.
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It is thought that fuel pricing is also a big focus area as the CMA has found that higher prices have been partly caused by a decrease in competition, with at least one supermarket had “significantly increased” profit margin targets on fuel.
It comes as Asda owners the Issa brothers and TDR Capital snap up stablemate, petrol station giant EG Group in a £2.3bn deal.
Asda has pledged to have the lowest supermarket fuel prices after the deal, however Labour MP Darren Jones, who chairs the business committee, has admitted there is “some concern around Asda’s leveraging”.
He told the newspaper: “While it’s not for parliament to tell firms how to run their business, if that blows up, it can have serious consequences.”
The business committee’s questioning comes ahead of Chancellor Jeremy Hunt’s meeting with regulators, including the CMA, Ofgem, Ofwat and Ofcom, on Wednesday to find out if the areas they regulate are passing on lower prices to customers.
Food inflation has remained stubbornly high. Although the 15.4% food price hike recorded by the BRC in May is slightly lower than the 15.7% jump in April, it is still the second-fast annual price rise ever measured.
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