The Competitions and Markets Authority (CMA) has revealed that grocers are not responsible for driving up food inflation.
Despite sky high food prices, the authority found that competition issues had not been the factor behind this.
The competition regulator noted that operating profits across the retail grocery sector dropped 41.5% in 2022/23 compared to the previous year.
Meanwhile, operating margins were also down from 3.2% to 1.8%.
This highlights retailers’ costs rising faster than their sales, showing that increasing costs have not been fully passed down to shoppers.
The CMA also found customers were shopping around for the best prices, indicating retailers could risk losing business from increasing their prices.
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Despite all this, the competition regulator said rules surrounding unit prices needed to be tightened to help shoppers easily compare product prices, pointing out some concerns including measurement consistency and legibility.
CMA CEO Sarah Cardell said: “We’ve found that not all retailers are displaying prices as clearly as they should , which could be hampering people’s ability to compare product prices…
“We’ve also looked at how competition is working across the grocery retail market more widely. The overall evidence suggests a better picture than in the fuel market, with stronger price competition between all of the supermarkets and discounters”.
She continued: “In the next phase of our work, we will examine competition and prices across the supply chain for the product categories we’ve identified”.
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