Morrisons slashes prices in ‘deflation dividend’

MORRISONS is cutting the prices of breakfast essentials by more than half after sky-high food prices were blamed for interest rates hitting 15-year highs.

David Potts, Morrisons’ chief executive, promised shoppers would see many “deflation dividends” over the coming months, as the supermarket kicked off its fourth wave of price cuts since the start of the year.

White, wholemeal and granary rolls will be 56pc cheaper from today, while coffee prices have been brought down by 27pc and prices for cornflakes by 46pc. Morrisons’ rolls are now cheaper than packs sold at Aldi, Sainsbury’s and Tesco.

The move comes days after supermarket bosses were called to a meeting at the Treasury to explain why the price of a weekly shop was still high and what they were doing to bring it down.

The Bank of England on Thursday said the rise in the cost of food and other goods was behind “almost all” of the unexpectedly high inflation over the past few months. Policymakers raised interest rates for the 12th straight time from 4.25pc to 4.5pc – the highest level since 2008 – in an attempt to keep a lid on rampant inflation.

The Bank, however, warned that food costs would keep on rising for the rest of the year, falling back “more slowly than previously expected”.

Because of this, it is now expecting inflation to remain above its 2pc target until 2025, nine months later than previously forecast.

The forecasts have ramped up pressure on supermarkets to show they are cutting prices for shoppers where wholesale costs are falling.

Earlier this month, prices for milk, loaves of bread and butter were lowered across UK grocers, thanks to declining dairy and wheat costs.

Mr Potts said Morrisons was “on the front line of commodity prices” because, unlike other supermarkets, it also owns food factories.

He added: “We’ll look to pass on any easing to our customers quickly. This week we’re launching our fourth wave of price cuts this year, including a number of products that we make or prepare ourselves.

“In particular bread rolls and cheese will be down very significantly in what we believe will be the first of many ‘deflation dividends’ for our customers.”

Morrisons has launched the four rounds of price cuts in recent months as it battles to lure shoppers back from Aldi and Lidl. The German discounters’ market share has ballooned over the past year as more customers hunt for the best value. Aldi overtook Morrisons to become Britain’s fourth largest supermarket last summer.