Money-saving deals at the big four are being used to conceal price rises, research from The Grocer reveals.
While more than a third of branded products are on promotion, according to Nielsen, analysis of data from The Grocer 33 database shows that up to 25% of money-off promotions on branded lines return at a higher price once the promotion draws to a close.
Sainsbury's, for example, reduced 200g jars of Nescafé from £4.13 to £3.00 for four weeks in January - but when the offer came to an end, the jar price increased to £4.45. Similarly, Tesco reduced Ariel powder (2.85kg) from £5.54 to £5.00, also for four weeks. When the offer finished, the powder went up to £5.78.
This pattern was repeated for promotions across the big four during December and January, when supermarket prices rose 1.7%, according to The Grocer Price Index. It was most prevalent in the household goods, hot beverages and carbonated beverage categories, although other items from HP Sauce to chocolate biscuits were also found to have risen in price after promotion.
Several branded manufacturers used promotions and discounts to ease in inflationary price rises, said Kay Staniland, MD of promotional consultancy Assosia.
"This tactic minimises the attention drawn to price rises. Manufacturers and retailers need to manage costs and try to preserve some kind of margin - a fine balancing act with consumers so price-sensitive right now.
"I suspect promotional activity followed by price rises is something we'll see more of in the year ahead."
Retailers said any price rises passed on after offers reflected changes in recommended retail prices.
"There is no policy of price rises following promotions at Morrisons," said a Morrisons spokesman. "Any price rises are solely a result of rsps going up from manufacturers."
"Many prices have been bought into line with the rsp once promotions have ended," said a Tesco spokeswoman. "Prices do change, but for those that have gone up there are many more that have come down."
A Sainsbury's spokesman said: "The promotions we offer are genuine and aimed at giving customers the best possible value on everyday products."
Prices are being driven up by the weakness of sterling and higher costs on a number of commodities, including tea (see box), sugar and cocoa (see p17).
The price war will be discussed and debated at The Grocer's inaugural Pricing, Promotions and Trade Investment conference on 31 March at the Millennium Gloucester Hotel & Conference Centre in London. For information visit www.ppti.thegrocer.co.uk, call 01293 610 468, or email grocermarketing@william-reed.co.uk