Price increase pressure for supermarkets

The supermarket giants are coming under pressure to increase their prices on a broad range of products such as eggs, milk and meats. The warning is that increases could soon start to pass through to the supermarket shelves because the cost of basic merchandise has escalated.

Demand in China and India for milk products and a variety of arable crops, together with poor harvests around the world are also driving up prices.

A spokesperson for Waitrose, the supermarket division of the John Lewis Partnership, remarked that there will undoubtedly be prices increases on dairy products, meat, fruit and vegetables. Waitrose works closely with farmers and suppliers to share the hurt of increasing costs.

In spite of the giant commercial success of Britain’s supermarkets, they operate on moderately thin profit margins meaning that absorbing large cost increases can be harmful.

A spokesperson for the Meat & Livestock Commission stated that in late summer, many farmers buy feed for the next year and prices are double what they were 12 months ago, meaning the price of meat in the supermarkets will have to increase by at least 10%.

However, retailers have declared that they will continue to provide low prices and a spokesperson for Asda stated they had carried out £250 million worth of price cuts in June but pointed out that it is impossible to forecast where markets were heading in the short-term.

Tesco commented that it will cut prices by a similar amount to its competitors.

Story link: Price increase pressure for supermarkets