Cost of living: Farmer discusses price increase of food
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According to Morrisons over 500 items will see their prices cut giving an average saving of 13 percent on products including eggs, baked beans and rice. Among the price cuts, a 430g pack of diced beef will drop from £3.99 to £3.59 while 1kg of chicken wings will fall from £2.80 to £1.75. A pack of 30 eggs meanwhile will go from £3.40 to £2.99 and a 1.5kg bag of plain flour from 65p to 45p. David Potts, Chief Executive, Morrisons said: “We know that our customers are under real financial pressure at the moment and we want to play our part in helping them when it comes to the cost of grocery shopping.
“These price cuts will have a noticeable and long term impact on our customers’ budgets and demonstrate our commitment to offering them the best possible value.”
Rival Asda meanwhile has also announced a string of price cuts which it says will deliver an average saving of 12 percent across its staples.
Among the examples given, 500g of rice will drop from £1 to 75p while a tin of John West tuna will go from £3.50 to £3.
At the same time the supermarket has announced it will increase pay for employees on the shop floor to £10.10 an hour from July.
Mohsin Issa, Co-owner of Asda said: “We know that household budgets are being squeezed by an increasing cost of living and we are committed to doing everything we can to support our customers, colleagues and communities in these exceptionally tough times.”
The moves come as supermarkets are increasingly left struggling to keep pace with German discounters Lidl and Aldi whose offering has proved attractive to shoppers struggling with rising living costs.
According to market research firm Kantar, Lidl and Aldi were the only big supermarkets to increase their market share in the 12 weeks to March while Morrisons and Asda both saw big declines.
Fraser McKevitt, Head of Retail and Consumer Insight at Kantar, noted there was now a switch from the pandemic being a dominant factor in shopping habits “towards the growing impact of inflation, as the cost of living becomes the bigger issue on consumers’ minds.”.
Meanwhile, the conflict in Ukraine has also pushed up prices of key commodities such as wheat, sunflower oil and fertiliser leading to rising food costs and the difficult choice for retailers of whether to absorb or pass these on.
Tesco has already warned that its profits are likely to remain flat this year as inflation squeezes margins with the firm opting to try to avoid passing on price rises as much as possible.
So far Tesco has proved a notable success in competing with Lidl and Aldi, ahead of rivals Sainsbury’s, Morrisons and Asda.
Victoria Scholar, Head of Investment at interactive investor, said: “Despite rising cost inflation with fuel, wages and food prices on the rise, Morrisons is attempting to attract more customers and achieve stronger sales, hoping that this more than offsets its lower margins.
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“This is one of the latest changes taking place at the supermarket under its new private equity ownership after it was acquired by CD&R last year.
“Earlier this month it was reported that the company was planning to sell off a £500 million property portfolio as part of the overhaul.”
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