Food Brands Are Profiting From ‘Greedflation’- Tesco Chairman
Tesco, a British multinational groceries and merchandise retailer brand, has cautioned that some food producers may be reaping the unjust advantage of high inflation. They are raising prices more than required under the explanation of the higher cost of raw materials and countrywide hyperinflation.
John Allan, Chairman of Tesco, has said that it is completely imaginable that food companies are profiteering by exploiting the poorest consumers during hyperinflation. Tesco has set up a team to observe food input costs against increasing prices and is questioning companies that they suspect are raising prices disproportionately. Allan told the Sunday with Laura Kuenssberg program that they have a dedicated group of observers who monitor the food composition and raw material costs and then assess the legality of price increments.
Allan has also added that most price raises are justified and have no discrepancies, and they are having a tough time challenging those supermarket chains that they suspect have done something illegitimate.
A spokesperson for Kraft Heinz, a food and beverage company in North America, has told CNBC that the F&B company is in clutches of inflated production costs and rising inflation. They are trying to absorb costs up to their capacity.
Kraft Heinz tomato ketchup and beans were on the list that was temporarily expelled from Tesco’s shelves last year due to a pricing conflict. After an agreement between Tesco and Kraft Heinz, the expelled products were back on shelves again.
Dodging responsibility
‘Which?’ – a United Kingdom-based organization promoting consumer choice, has said that retail supermarket chains like Tesco could be shedding off their responsibility by blaming the price hike on its suppliers.
Which? has a Supermarket Inflation Tracker that has found that the supermarkets in house label products have registered higher inflation in comparison to other brand products that have slightly lesser inflation impact.
In the third quarter of December 2022, the prices of the supermarket’s brands increased 18.3% year on year, whereas the increase in the price of other branded items has risen 12.3% year-on-year basis.
Reena Sewraz, retail editor at Which?, has told in talks with CNBC that they have noticed higher than usual price increments at such supermarkets. Their research finds that although the consumers favor their brands and necessary products to help them survive in these times of the higher cost of living, these product ranges have registered higher rates of inflation than premium and other branded products.
This price rise has followed along with the already high prices of goods and services due to supply chain troubles due to the ongoing Russia-Ukraine conflict.
Inflation in the United Kingdom
The British Office for National Statistics has said in a report that in November 2022, the inflation in the United Kingdom was 10.7 percent; these inflation numbers are lower than the 41-year high of 11.1 percent registered in October this year. The recent inflation data is slightly lower than the previous month, and it stands at 10.5 percent.
The core CPI numbers held the ground at 6.3 percent in December. This number doesn’t include food, energy, alcohol, and tobacco.
The inflation rate in food and non-alcoholic beverages was 16.9 percent in November 2022.
Consumers have shifted to the items of supermarket brands and have started shopping at discount chains like Tesco, Sainsbury’s, Asda, Morrison’s, and alike.