Debt pile forces Morrisons to hike its prices

moRRISoNS hiked prices by almost a fifth in the past year – more than any other major grocer and double the rise at Sainsbury’s.

A shopping basket at the Bradford-based supermarket cost £75 this month, an 18pc increase from a year earlier, according to The Grocer magazine.

The findings vindicate critics of morrisons’ sale – to US private equity barons two years ago – who warned it would lead to higher prices.

The same basket of 33 everyday products cost £70 at Sainsbury’s, having increased 9pc from a year earlier. Tesco’s basket cost £74, a 13pc increase, while Asda was the cheapest at £67.15, up 11pc.

Among morrisons’ price hikes were on tubs of New Covent Garden leek and potato soup, which are now more than twice as costly as a year ago, at £2.20 for 560g. It also raised the price of 750g boxes of Jordans granola by 80pc to £3.59, and Filippo Berrio olive oil by 50pc to £5.99.

The industry average overall price rise for a basket of shopping is 13.2pc. It is the latest sign morrisons has been jacking up prices quicker than rivals since falling into private equity hands in 2021.

The chain was bought by US private equity firm Clayton, Dubilier & Rice (CD&R) in a debt-fuelled deal spearheaded by former Tesco chief Sir Terry Leahy. Analysts say its huge borrowings at a time of rising interest rates have left it with less scope to keep prices low.

As a result it has haemorrhaged shoppers to Tesco, Sainsbury’s and Asda. morrisons has lost a chunk of its market share to Aldi and Lidl, with the former stealing its spot in the ‘Big Four’ of British grocers last year.

Credit agency moody’s downgraded morrisons’ rating last week. Accounting professor and Labour peer Lord Sikka said the grocer is suffering from ‘the curse of private equity’. He said CD&R financiers have followed ‘the usual model’ of loading a company up with debt and trying to maximise short-term profits.

Sikka also pointed to ‘sale and leaseback’ activity, a factor that contributed to the demise of Debenhams in 2020. He asked: ‘Will history repeat itself, and will morrisons go the same way as Debenhams, maplin, Toys R Us and others?’

morrisons said it has improved this year on price compared with rivals, cutting the cost of many products.