Prices in the UK increased by far more than in EU
Aug 9, 2007 by Michael Redbourn
Consumers in the U.K. now pay 5.6% more to fill their trolley than they did a year ago and that compares with an increase of only 1.9% in the Eurozone and a recent research by the Royal Bank of Scotland challenges claims by supermarket chains such as Tesco and Asda that their vast market shares is not the reason for the increases.
Tesco controls 31.2% of the British grocery market while Asda has 16.9%.
The report's two authors, economists Geoffrey Dicks and Ross Walker said that rising energy prices are thought to have pushed up the cost of a broad range of products including food but added that poor harvests are also thought to have contributed to price raises in recent months.
The two authors were unable to explain why prices in the U.K. should be rising at a significantly faster pace than elsewhere in Europe but did say that an attempted explanation would be somewhat sinister, “Over the years, as the supermarket giants built up their market share they came to dominate food sales and at the same time they progressively extended their reach into non-food products and it may be that they are increasingly able to exploit their monopolistic position and to raise prices even when consumer spending is not especially robust”.
The report entitled, “The Return of Rip-Off Britain?”, found that tea and coffee prices rose by 10.2% over the last 12 months compared with only 1% on the Continent.
Vegetable prices also jumped by 10.2%, whereas they rose by 3.1% across the Channel. Non-alcoholic drinks went up by 6% compared with 2% in the rest of Europe.
Critics have urged the “Competition Commission” that is supposedly investigating the industry to verify the latest findings and warned that the power of Tesco is such that Britain is in danger of turning into a “one-supermarket state”.
Matt Hardman a spokesman for the “Forum of Private Business” said, 'The supermarkets have been able to convince consumers that shopping with them is cheaper than anywhere else but in reality if you do your homework you can get a better deal elsewhere. We are concerned by their power to inflate prices, drive their competitors out of business and grab market share.'
A “Competition Commission” spokesman said that they would look very closely at the research.
Tesco hit back yesterday insisting that it offered shoppers an extremely good deal and said that the prices of some fresh products have been rising “because of forces beyond the company's control”.
Tesco spokesman Jonathan Church said, 'The price war isn't yet over in the UK. We still compete fairly on price and we continue to invest in cutting prices. It would be wrong to suggest any price rises are due to monopolistic pressures. Some prices have gone up on some fresh food but to suggest it is due to some practices between the supermarkets is nonsense”.
So, there you have it. Or you don’t!