Food brands may be profiteering from price hikes

Consumers have been feeling the pinch from higher food prices as inflation continues to rise.

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As inflation continues to rise, supermarket giant Tesco has warned that some food manufacturers may be taking advantage of this by raising prices more than they need to.

The chairman of Tesco, one of Britain’s biggest supermarkets, said on Sunday it was “possible” that some food companies were benefiting from rising prices for the poorest.

John Allan told the BBC that Tesco had “disappeared” from “a number of retailers”, following discussions about price rises which the supermarket chain had opposed.

Tesco has set up a panel to review food costs based on inflation and is cracking down on companies it believes are raising prices unnecessarily, Allen said.

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“We have a group that will look at the production of food, the price of products, and see if this increase in price is acceptable,” he said on the “Sunday with Laura Kuenssberg” program.

Allan said that, while many of the price hikes were legitimate, supermarkets were “going to great lengths to challenge” those they felt were not.

Tesco told CNBC it was unable to provide further comment.

Food vendors have responded to the allegations. Heinz beans and tomato ketchup were among the products Tesco temporarily pulled from the shelves last year in a price row. The product went back on sale after the deal.

A Kraft Heinz spokesperson told CNBC on Monday that the company continues to face rising production costs and rising inflation, but is “taking capital” where possible.

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Passing money

A consumer group called What? He said that it is possible that supermarkets like Tesco cut costs by saying that suppliers are raising prices unfairly.

In its latest Supermarket Inflation Tracker, Which? they found that branded products had significantly lower interest rates than supermarket products. In the three months to December 2022, retail prices rose 18.3% year-over-year, compared to a 12.3% year-over-year increase for popular items.

“We have seen a significant increase in prices in the market and our research shows that although many people choose their brand with essential products to help them in the cost of living, this has been much lower than premium and labeled foods,” Reena Sewraz, What? marketing editor, told CNBC.

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It comes as consumers continue to face higher prices, due to disruptions in the supply chain and Russia’s war in Ukraine.

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UK inflation eased slightly to 10.5% in December from 10.7% in November, but remains at a 40-year high.

The price of food and soft drinks rose 16.9% in the year to November 2022, new data showed on Wednesday.

These rising prices have led many shoppers to opt for supermarket brands and discount chains, such as Lidl and Aldi.

Discount stores are not immune to recent price hikes. Despite remaining among the UK’s cheapest stores, prices at Lidl and Aldi respectively rose 21.1% and 20.8% in the year to December, according to Which?.

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