‘I hope it haunts you’: Supermarkets reject calls for price caps on essential items

NORTHWICH, ENGLAND - JULY 06: Baby formula sits on display in a Tesco supermarket on July 06, 2022 in Northwich, England. The British Retail Consortium recently said food manufacturers and supermarkets are having to pass on some of the cost of soaring raw materials to consumers, leading to the price of basic goods throughout the UK rising at the fastest pace since September 2008. Fresh food prices increased by 6% in the year to June 2022 coupled with an increase in inflation, and fuel and energy prices to create a cost of living crisis.  This is leading to millions of low-income households going without essentials items, falling behind on bills and taking on debt. (Photo by Christopher Furlong/Getty Images)
Images of security tags on baby formula caused alarm over the desperate situations the cost of living crisis is putting families in. (Getty Images)

Supermarkets have rejected calls for price caps on essential items after an MP described "haunting" images of security tags placed on baby formula - a sign of the desperation faced by many amid the cost of living crisis.

Senior figures from Tesco, Sainsbury's, Asda and Morrisons were all united in their resistance as they were grilled by MPs on the Business and Trade Committee on Tuesday.

They argued their market is already "fiercely competitive" and does a great job of regulating itself, rejecting accusations that they are profiteering and contributing to so-called "greed-flation".

Committee member Ian Lavery MP said: "If you look at the images of baby formula milk in locks, it haunts me and I hope it haunts you.

"In light of what the IMF reported today about profiteering causing inflation, would you - like your counterparts in France - cap or support capping essential items?

Read more: Cost of living: As MPs prepare to grill supermarkets on price rises, how to save money on food

Cash-converters and Morrisons Daily stores along wide Bargate in the town centre
Morrisons CEO David Potts told the committee he'd look to put more from the Savers Range into its smaller convenience stores. (Getty Images)

Responding to the Labour MP after being pressed into giving a simple "yes or no" answer, Tesco commercial director Gordon Gaffa said: "We don’t believe price caps would be helpful."

David Potts, CEO of Morrisons, added: "I would say competition leads you to the right place."

Asked earlier in the hearing about the idea of voluntary price caps introduced as an industry standard, similar to the French model, Rhian Bartlett, food commercial director for Sainsbury's warned of "unintended consequences".

She said the supermarket industry in the UK is already a "fiercely competitive" market, with chains "watching and matching each other's prices all the time".

Read more: The Heartbreaking Reality Of Parents Stealing Baby Formula Because They Can't Afford It

“I’m not sure what price caps would add to that process other than bureaucracy," Bartlett told the committee.

"I think where we’ve seen them applied in France and so on it can have unintended consequences in selling out and other prices moving up and down around, so I think this market self-regulates to a positive extent."

Industry figures may have stood their ground on this point, but they did concede that they could look at reducing prices in their convenience stores.

Read more: Supermarkets tell MPs they can't cut prices any further

This photograph taken on May 31, 2023, shows the fruit and vegetable aisle of a Lidl discount supermarket, in Chatenay-Malabry. (Photo by JOEL SAGET / AFP) (Photo by JOEL SAGET/AFP via Getty Images)
Supermarket executives warned that following the French model of price caps could lead to 'unintended consequences' (Getty Images)

It comes after a recent report by Which? found that supermarkets are failing to make their own-brand budget range products available at their smaller outlets, which some people depend on due to lack of transport options.

Antony Higginbotham MP said: “The customers who rely on those stores, they’re not using it for convenience, they’re typically lower income with less access to cars or good public transport.

"So, what are you doing to help make sure in those stores there is a better range of own brand essentials?"

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Tesco's Gaffa said the stores are stocked with "ranges that are relevant to each of their customers", while Sainsbury's Bartlett added that most of the people who use their convenience stores aren't doing so for their main shops.

Morrisons' Potts said he visited a housing estate in Aberdeen a few weeks ago and could see what Higginbotham was getting at, adding that the use of convenience stores there would be very different to the Tesco Express by Westminster Tube station.

Watch: Executives from the UK's leading supermarkets defend their food prices

Potts admitted that Morrisons are fairly "new into this game", as it expands its Morrisons Daily outlets after buying out McColl's in late 2022.

He added: "I believe there are plenty of own brand in the convenience stores across Britain. We have lowered the prices opposite McColl's by up to 10% when you go to Morrisons Daily.

"But I am happy to shove a few Savers (from Morrisons' Savers Range) that we talked about earlier in this meeting into those stores, especially until the food inflation normalises in this country.

"I think that would be a good thing to do, particularly in those areas where people are relying on that site."

On the issue of vulnerable and lower-income customers with fewer opportunities to shop around, Higginbotham asked Gaffa why Tesco has a minimum order of £50 for its online shops.

Read more: British supermarkets deny profiteering, acting as a cartel

“Are you just pricing out lower-income families from online shopping? That is double by the way the Morrisons minimum order," he said.

Gaffa replied: “The £50 minimum basked size is the first change we’ve done in nearly eight years. The average basket size online is £90.”

He said it was reasonable to impose this limit based on the average orders made by customers, and the inflationary pressures faced by the industry.