Tesco chairman John Allan has suggested that some food manufacturers may be using high inflation as a pretext to increase prices beyond what is necessary. In an interview with the BBC, Mr Allan said it was 'entirely possible' that producers were taking advantage of the poorest in society.
Mr Allan stated that Tesco is working 'very hard' to challenge price increases it considers illegitimate. The supermarket has a dedicated team that analyses the composition and commodity costs of food to determine whether supplier price hikes are justified. He confirmed that Tesco has 'fallen out' with several suppliers following robust discussions over pricing.
The comments come as food prices in the UK continue to soar, with the Office for National Statistics reporting a 16.8% annual increase in food costs in December 2022, the fastest since 1977. Basics such as milk, cheese, and eggs have seen the largest rises, while inflation overall stood at 10.5%.
Mr Allan referenced last year's dispute with Kraft Heinz over the pricing of baked beans and tomato ketchup, which led to Tesco temporarily removing those products from shelves. He also noted that while commodity, energy, and labour costs have risen sharply, shoppers seeking lower prices can opt for own-label alternatives.
Consumer group Which? has tracked price rises across major supermarkets, finding Lidl to have the highest annual increase at 21.1% in December, followed by Aldi at 20.8%. Tesco ranked sixth in the list of retailers with the highest price rises. The cost-of-living crisis continues to pressure households, with inflation remaining near 40-year highs despite a slight dip in December.
