Price Hikes Hit Consumers as Competition Watchdog Exposes Brands' Profiteering
Consumers are feeling the impact of unjustified price increases on various branded products, including baked beans and baby formula, as revealed by a recent investigation by the UK's Competition & Markets Authority (CMA).
The CMA's analysis across 10 categories, such as milk, pet food, and mayonnaise, revealed that suppliers of popular food brands have increased prices more than their costs over the past two years, contributing to food price inflation.
Approximately three-quarters of branded suppliers, including major players in baby formula, have raised unit profitability, adding strain to household budgets amid a cost of living crisis. While rising energy and fertiliser costs primarily drive food price inflation, the CMA notes that many branded food items across categories have inflated prices beyond cost increases.
The shift in consumer behaviour is evident as shoppers turn to more affordable own-label products due to the cost of branded items and the overall cost of living crisis. This trend has led to branded products losing market share and subsequently reducing profits.
In the case of baby formula, which has limited alternatives, prices have surged by a quarter over the past two years, leading to concerns about potential exploitation. The CMA found that new parents could save around £500 in the first year by shopping around for more affordable options, emphasising that cheaper formulas must adhere to nutrient standards.
In response to the CMA's revelations, the Food and Drink Federation stressed that manufacturers had absorbed costs to shield consumers from higher prices. However, the ongoing investigation suggests that the impact on consumers may be more significant than initially perceived.
As food prices continue to rise, the competition issues exposed by the CMA highlight the need for a balance between brand profitability and consumer affordability. In the coming months, the CMA plans to assess the broader implications of these pricing practices and hopes to bring about fairer pricing structures, providing relief to consumers facing the challenges of inflation and a costlier cost of living.
