Member Article

The rise in the cost of living remains a key societal concern and thus an issue for government. The purpose of the UK’s Competition and Markets Authority (CMA) is to promote competitive markets and tackle unfair practices.

On 15 May 2023 the CMA issued the report ‘Action to help contain cost of living pressures’. Regarding groceries, the report identifies that food inflation in the UK was 19.1% in March 2023, compared to general inflation at 10.1%.

The report identifies that grocery prices are the result of competition at three main levels of the market:

1. Competition between retailers, where consumers shop for their products;
2. Competition between suppliers who make the products and sell them to the retailers; and
3. Competition between raw material providers who provide the inputs to food suppliers. 

The report does not expressly identify private label goods, namely, goods made by or on behalf of the major supermarkets and sold as their own products, and branded label goods, namely, products sold by supermarkets that are purchased from suppliers such as Coca-Cola’s Fanta drink or Unilever’s Ben & Jerry’s ice cream

An article in the Financial Times newspaper of 16 May 2023 identifies research by data group Circana that reveals prices of private label goods rose by 16.3% compared to branded label goods which rose 10%. 

In light of the research by Circana it would seem appropriate that the CMA includes in its ongoing analysis of the groceries market the competition aspects of private label and branded products with a view to understanding the dynamics of and even why it is that private label prices are rising materially more than branded products. 

The CMA plans to provide an update on its work over the coming months.

 

https://www.ft.com/content/2bd5b209-2074-47dd-a94c-a742283e45c9

 

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