Food suppliers may have unfairly inflated prices, says Tesco boss

TESCO’S chairman has claimed food suppliers may be using inflation as an excuse to raise prices further than necessary as the cost of household staples soar.

John Allan said in a BBC interview yesterday that it was “entirely possible” that food suppliers and manufacturers were needlessly putting up prices.

When asked by the BBC’S Laura

Kuenssberg if he thought companies were “taking the mick” out of consumers with recent price hikes, Mr Allan replied: “I think that’s entirely possible … they may well have.” He added: “I can’t be definitive because I haven’t seen their cost structures”.

Mr Allan added that Tesco had “fallen out” with some suppliers after “robust” price negotiations.

Last year goods including Whiskas and Pedigree petfood, along with Heinz beans and ketchup, briefly disappeared from the shelves amid a pricing row.

Office for National Statistics data suggest food prices are 16.8pc higher than in January 2022. Staples such as milk, eggs and cheese have seen the biggest price increases over the past year, although bread and cereals have reduced slightly according to the BBC.

Supermarkets say they are trying to limit their price increases despite high inflation rates, which typically cause lower consumer confidence.

It comes as rival chain Morrisons cuts prices on hundreds of product lines after being eclipsed by Aldi.

The supermarket is pushing through price cuts on 820 products on its shelves, making a total of 1,000 products on which it has reduced prices this month.

Until last September Morrisons held the title of the UK’S fourth largest grocer, but slipped into fifth position after being leapfrogged by Aldi – the fastest growing supermarket in the UK.

Figures earlier this month from retail analysts at Kantar found that Aldi’s sales had jumped 27pc in the year to Christmas, while Lidl’s grew 24pc.

Morrisons, meanwhile, has proved one of the worst performing grocers, according to Kantar, with sales down 2.9pc over the year, compared with 6pc growth at Tesco and 6.2pc at Sainsbury’s.

There have been signs, however, that Morrisons could be starting to turn a corner on losing customers through measures such as price cuts, with Kantar

saying the grocer recorded its “best performance since June 2021” in December.

Analysts at the research firm said this stood the retailer, which reports its annual results later this week, in “good stead for a return to growth in the new year”.

Official data last week suggested that Christmas had proved tougher for retailers than many had been expecting, with retail sales down 1pc in December.