Food price inflation is all we seem to read about these days, but latest figures from The Grocer Price Index prove that competition between the rival supermarkets is keeping a lid on the cost of a weekly shop.
According to figures compiled for The Grocer by BrandView.co.uk, the average cost of groceries across the big four supermarkets is just 3% higher than this time a year ago.
The figure is lower than other measures as the GPI is the only inflation tracker that factors in the impact of promotions, rather than simply using the base price.
The most significant finding in the figures, however, is the impact of the Asda-Tesco price war. Despite gloomy predictions of commodity price rises, the average Asda shopper is paying the same amount this week for their groceries as they did a year ago.
The Leeds-based retailer has become embroiled in an increasingly acrimonious price war with its rivals Tesco in particular since unveiling its 10% Price Guarantee in January. At the time Asda said it had harnessed the buying power of its parent company Walmart to extend its lead on pricing from 8% to 10%.
This activity has clearly been pivotal in keeping prices down at Asda, but Tesco’s response means that its shoppers will be paying just 1% more on average this week than a year ago.
Tesco unveiled the details of its fightback on 28 February. In order to back up its now-infamous Double the Difference pledge, it announced a £200m investment in price. As a result, Tesco’s prices were on average 2.8% cheaper last month than during February.
“We know customers are under pressure and our job is simple to keep prices lower for longer,” Asda CEO Andy Clarke told The Grocer. “While we’re pleased your numbers recognise what we’re doing to minimise the impact of rising prices, customers should know we’ll be just as relentless in the months ahead.”
Tesco’s corporate affairs director Lucy Neville-Rolfe said: “This shows how Tesco is helping to limit the impact of inflation on customers which also helps the wider economy”.
However, Morrisons and Sainsbury’s have been less successful in staving off the impact of inflation in the past year. Morrisons prices were up 4% on average year-on-year, despite the retailer launching what it called its “Biggest Ever Price Crunch” in January.
Sainsbury’s, which last week posted a full-year like-for-like sales increase of 2.3% to 19 March, had the biggest price increase of the major supermarkets up 5% on this time last year.
This was despite CEO Justin King telling The Grocer last month that it wasn’t retailers’ jobs to accept cost increases and pass them onto customers, but to bear down on them.