Outlook: Smokescreen won't save supermarkets
Tuesday 09 March 1999
Coming just days after Tesco attempted to grab the headlines with a similar round of cuts, and a couple of weeks after the price of bread sank to 7p a loaf in the so-called "bread wars", it is worth asking the question: are these the first shots in a full scale price war? Or are they just bits of tactical, PR posturing that just happen to have been launched a couple of weeks ahead of the expected publication of the OFT report on supermarket profiteering?
Life has undoubtedly got a little tougher for our supermarket behemoths. But a look at the official retail figures shows that compared to other sectors, food prices have held up very nicely for the grocers. While footwear and clothing prices were under constant deflationary pressure last year, food prices rose by 2 per cent. The rise added around 0.5 percentage points to the overall inflation increase of around 2.5 per cent.
Certain prices have shown remarkable rises. The price of potatoes in January was 29 per cent higher than the same month a year ago, for example, though supply issues are a major factor here. Tea, where supply is less obviously a problem, went up by 9 per cent, fish by 12 per cent and fresh vegetables by 7 per cent.
Retail prices of pork (one of the items reduced in price by Asda yesterday) fell by 11 per cent. But this was in a year when the wholesale price of pork plummeted because of oversupply in Europe and the evaporation of demand from Russia and the Far East. Was all that price fall passed on to customers before yesterday's little manoeuvre? You bet it wasn't.
When Asda reported its half year results in December its margins had fallen by just 0.2 per cent year on year. Not much pain there. One thousand sounds a big number, but more than a third of the cuts are confined to poor selling and narrow product ranges like fruit flavoured teas and sun lotion.
There's no getting away from it. As the OFT puts the finishing touches to its report, it is becoming very clear that the supermarket sector is one place where the major players can definitely afford to charge lower prices - and permanently. Government proposals to introduce regular shopping basket price comparisons, plus a kick from the OFT, will force them to do just that.
- 2 Purity balls: Girls in the US making virginity pledges as fathers vow to 'protect purity'
- 3 Picture of couple posing with beached dolphin 'that later died' causes outrage
- 4 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
- 5 Arsenal fan asks the Queen for tickets to the FA Cup final - gets a reply from Buckingham Palace
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...