Key facts
- Retailers have pushed back against Chancellor John Healey's warnings of cracking down on "price gouging" during the Iran war.
- The British Retail Consortium (BRC) stated that the UK retail sector has low profit margins and that competition keeps food prices down.
- BRC cited multiple reports from the Competition and Markets Authority (CMA) that found no evidence of profiteering by British grocers.
- The BRC argued that government policies, including National Insurance contributions and packaging taxes, contribute to retailer costs.
- Food inflation has recently fallen to 1.7% despite fears of price surges due to the Iran war.
Retailers have responded to Chancellor John Healey's warnings against price gouging amid the ongoing Iran war, asserting that intense competition within the sector is what keeps food prices as low as possible. Healey had stated that the Treasury is prepared to take action against any retailers using the conflict as a pretext to increase prices.
The British Retail Consortium (BRC), representing major UK retailers like Sainsbury's, Tesco, and Asda, has pushed back against the Chancellor's rhetoric. Jim Bligh, the BRC's corporate affairs director, told City AM that labeling retailers as potential profiteers is unhelpful, given that the industry operates on some of the UK's lowest margins. He emphasized that competition is actively suppressing food price inflation, and suggested that government support for the industry on this front has been lacking.
Bligh warned that Healey's threats could provoke an industry backlash, and that retailers would continue to demonstrate the strength of competition to the CMA to prove there is no profiteering. Andrew Opie, the BRC's director of food, pointed to three consecutive reports by the CMA that found no evidence of profiteering among British grocers. Opie also noted that many additional costs facing retailers have been imposed by the government, citing higher National Insurance contributions, increased packaging taxes, and the failure to reform business rates.
Food inflation has recently fallen to 1.7% in June, despite concerns that the Iran war would lead to a surge in supermarket prices. Healey himself had written in the Sunday Telegraph that while companies have worked positively with the government during the crisis and there has been no significant evidence of price gouging, regulators have the power to clamp down if it occurs. This follows similar suggestions from Healey's predecessor, Rachel Reeves, which were met with strong criticism from industry leaders.