Some food firms may be using inflation as an excuse to hike prices further than necessary, the chairman of Tesco has said, adding that Tesco was trying “very hard” to challenge price hikes it thinks are illegitimate.
Asked by the BBC‘s Laura Kuenssberg if food producers were taking advantage of the poorest in society, John Allan said it was “entirely possible”.
Allan said all supermarkets were challenging cost increases from suppliers where they could – and Tesco was confronting companies it believed were increasing prices beyond what was necessary.
“We do try very hard to challenge [price hikes], I think,” Mr Allan said.
“We have a team who can look at the composition of food, costs of commodities, and work out whether or not these cost increases are legitimate.”
He said it was something Tesco’s buying teams were dealing with “every day of the week”.
Tesco, which has a 27.5 per cent share of the grocery market, had “fallen out” with “a number of suppliers” after “robust” discussions over price hikes that the supermarket had challenged, he said.
Most price hikes were legitimate, Allan added.
“There have been some dramatic increases in commodity costs, energy costs and labour costs. On the other hand, if you don’t want to pay £1.70p for… soup in Tesco or any other supermarket, there are own-label alternatives,” he said.
Inflation, which measures the rate of price rises, fell to 10.5 per cent in the year to December from 10.7 per cent in November – but remains at levels not seen for 40 years.
Food prices rose 16.8 per cent in the year to December, said the Office for National Statistics (ONS), with basics such as milk, cheese and eggs saw the biggest increases. Prices for jam, honey and chocolate also jumped. However, price growth slowed for bread and cereals.
Allan’s statement comes a week after a report by consumer group Which? placed Tesco at sixth rank in the list of eight major supermarkets with the highest price rises.
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