Supermarkets pledge cuts but rake in profits
Supermarkets have been accused of 'fattening up' their profits while claiming they are cutting prices for shoppers.
Supermarket sneaks: Stores have pushed prices up
A study reveals the stores have imposed alarming price increases on staple foods, despite advertising discounts on popular items.
The annual rate of increase in the cost of a typical shopping basket leapt to 21.3% in November - adding more than £1,100 a year to family grocery bills.
Yesterday the Liberal Democrats said supermarkets had 'no excuse' for hiking prices at a time when their costs were coming down. Falling commodity prices mean they are paying less to stock their shelves - but customers are being hit with price hikes for weekly essentials.
Critics claim the 'big four' stores - Tesco, Asda, Sainsbury's and Morrisons - may be 'fattening up' their profit margins at the expense of hard-pressed customers and suppliers.
Supermarket chains have seen a profits bonanza over the past 12 months.
Sainsbury's last week revealed a 13.3% hike in profits for the past six months. Tesco, Asda and Morrisons have been doing just as well.
MySupermarket.com, which helps to compile The Daily Mail Cost of Living Index, puts the annual rate of food and drink inflation at 6.2%.
However the cost comparison site says it found 'drastic' increases on a small group of items bought by households every week. It means a typical family's food bills shot up by 21.3% this month.
In October the rate of increase was just 14.1%. A family spending £100 each week a year ago would have to find an extra £1,107 a year to put the same items on the table based on these figures. This has fuelled suspicions that the stores are failing to pass on savings to customers.
LibDem Treasury spokesman Vince Cable said: 'There is clear evidence that oil, food and commodity prices are falling around the world. These should be passed on by retailers.
'There really is no excuse for supermarkets to take advantage of the situation to fatten up their profit margins.'
Inflation, deflation and the cost of living
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- A history of inflation
- Interest rates: The inflation impact
- Deflation: Winners and losers
- 30-second guide: Controlling inflation
- 30-second guide: Deflation
- 30-second guide: Inflation basket
- Calculator: What money used to be worth
- Calculator: Your personal inflation rate
- Table: Price changes over 10 years (click & scroll down)
The National Farmers' Union accused supermarkets of demonstrating the sort of greed that triggered the banking crisis.
Speaking at a conference in Cardiff, its president Peter Kendall said: 'It is not inappropriate to ask, in the wake of the damage done by unfettered, greed-motivated behaviour by some in the financial sector, whether Tesco should continue to chase every last pound of dividend for shareholders at the potential expense of massive damage to the rural infrastructure in this country.'
Tesco said: 'When suppliers faced higher costs as a result of rising commodity and fuel prices Tesco increased the price it paid its suppliers to help. Now as most of these prices have fallen, in many cases to levels last seen two years ago, we have a duty to align costs and pass back savings to customers'.
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