Supermarket executives in Britain have dismissed claims of profiteering amid a cost of living crisis, asserting that they have absorbed pricing pressures and sacrificed profits by not passing the

full burden onto consumers.

Food prices in the country have been on the rise for over a year, with the invasion of Ukraine by Russia exacerbating existing supply chain disruptions caused by the pandemic. Official data shows that Britain had the highest food price inflation rate in Western Europe, reaching 18.7% over the 12 months leading up to May. Only Germany has experienced higher food price increases since late 2021.

The surge in food prices has contributed to a significant squeeze on living standards in Britain, prompting inquiries into who bears responsibility for the situation. Trade unions and politicians have accused supermarkets of engaging in "greedflation," alleging that they have been slow to pass on the benefits of falling global commodity prices to consumers.

During a hearing in front of the business and trade committee of the lower house of parliament, executives from leading supermarket chains Tesco, Sainsbury's, Asda, and Morrisons refuted these allegations, citing declining profits in the previous year as evidence. Gordon Gafa, Tesco's commercial director, stated that the company makes a profit of 4 pence for every pound spent by customers, which he believes does not indicate profiteering. Rhian Bartlett, Sainsbury's commercial director, mentioned that her company earns less than 3 pence per pound spent by customers, while Kris Comerford, Asda's chief commercial director, pointed out that a 25% decrease in profit in 2022 is inconsistent with accusations of profiteering.

The British Retail Consortium, representing major supermarkets, explained that there is typically a lag of three to nine months for wholesale price decreases to be reflected in retail prices, with a longer lag for complex supply chains.

Swati Dhingra, a policymaker at the Bank of England, also stated that there is little evidence so far of companies failing to pass on lower producer prices, casting doubt on the notion of "greedflation."

Supermarkets maintain that they are passing on savings to customers as soon as possible and have recently reduced prices on certain staple products. However, official data shows that prices for milk, cheese, eggs, oils, and fats remain significantly higher compared to last year.

While the French government secured commitments from 75 major food companies to lower prices on hundreds of products, and Hungary has implemented mandatory price cuts, British executives argued against the necessity of price caps. They emphasized the competitiveness of the British food market and the self-regulation and positive effects of competition in the industry. The executives also highlighted the additional challenges of higher energy costs, rising wages, and increased logistics expenses, as well as fierce competition from German discount retailers Aldi and Lidl, which have gained market share in Britain over the past decade. Photo by Mtaylor848, Wikimedia commons.