Grocery prices at the big four supermarkets have increased by an average of 2.8% year-on-year in the face of escalating costs, according to The Grocer 100.
Our monthly survey of individual pricing trends at the major multiples, based on a secret basket of 100 grocery items, shows that none of the big four has been able to keep a lid on the soaring fuel and packaging costs that have been hitting the supply chain.
Asda's basket price has risen 2.5% in the past 12 months, Morrisons is up 1.51% and Tesco's has risen 0.7%. The biggest rise, however, took place at Sainsbury. At £180.45, its basket price is currently £6.77 more expensive than it was 12 months ago, equating to an increase of 3.89%.
Christopher Gower, food industry analyst at Man Securities, said retailers were facing two options for dealing with rising costs.
"They can either attempt to absorb the costs, which many of them do not have the capacity to do, or they can start passing them on to the consumer, which is what appears to be happening at the moment, and why we are seeing this inflationary trend."
The bigger than average prices rises at Sainsbury indicate that Justin King's plans to start rebuilding the retailer's eroded profit margins, following a successful drive to win back lost customers and boost sales, are under way. Freddie George, food and drink analyst at Williams de Broë, said: "It is very possible that this is what we are starting to see. Sainsbury's sales have been strong these past few quarters, and King will now be under pressure from the City to get the margins up."
Analysts predicted that Sainsbury would become much less aggressive on its promotional pricing.
But George warned: "While King will now be eager to start edging prices up, he must take care with how he does this.
"Coming too far out of sync with the other major players could have an incredibly negative effect with customers."
A strong inflationary trend has played across the grocery industry ever since the beginning of the New Year, and results from The Grocer Price Index show that retail prices have soared 3.2% in the period between the first weeks of January and July.
Again Sainsbury registered the biggest price increases, according to The Grocer 100. The cost of Sainsbury's basket rose by £7.18 in that same period - which is far more than any other retailer in our survey.
This time last year Sainsbury's extensive price slashing had been responsible for fuelling the deflationary pressures on prices as a whole.
n Banana prices have bounced back after a round of fierce price cutting sparked by Asda. The retailer cut banana prices to 64p/kg from 85p/kg in April, and was quickly followed by its rivals, wiping £100m off sector value. The Grocer 33 reveals this week that prices at the big four have all returned to 85p/kg.
Our monthly survey of individual pricing trends at the major multiples, based on a secret basket of 100 grocery items, shows that none of the big four has been able to keep a lid on the soaring fuel and packaging costs that have been hitting the supply chain.
Asda's basket price has risen 2.5% in the past 12 months, Morrisons is up 1.51% and Tesco's has risen 0.7%. The biggest rise, however, took place at Sainsbury. At £180.45, its basket price is currently £6.77 more expensive than it was 12 months ago, equating to an increase of 3.89%.
Christopher Gower, food industry analyst at Man Securities, said retailers were facing two options for dealing with rising costs.
"They can either attempt to absorb the costs, which many of them do not have the capacity to do, or they can start passing them on to the consumer, which is what appears to be happening at the moment, and why we are seeing this inflationary trend."
The bigger than average prices rises at Sainsbury indicate that Justin King's plans to start rebuilding the retailer's eroded profit margins, following a successful drive to win back lost customers and boost sales, are under way. Freddie George, food and drink analyst at Williams de Broë, said: "It is very possible that this is what we are starting to see. Sainsbury's sales have been strong these past few quarters, and King will now be under pressure from the City to get the margins up."
Analysts predicted that Sainsbury would become much less aggressive on its promotional pricing.
But George warned: "While King will now be eager to start edging prices up, he must take care with how he does this.
"Coming too far out of sync with the other major players could have an incredibly negative effect with customers."
A strong inflationary trend has played across the grocery industry ever since the beginning of the New Year, and results from The Grocer Price Index show that retail prices have soared 3.2% in the period between the first weeks of January and July.
Again Sainsbury registered the biggest price increases, according to The Grocer 100. The cost of Sainsbury's basket rose by £7.18 in that same period - which is far more than any other retailer in our survey.
This time last year Sainsbury's extensive price slashing had been responsible for fuelling the deflationary pressures on prices as a whole.
n Banana prices have bounced back after a round of fierce price cutting sparked by Asda. The retailer cut banana prices to 64p/kg from 85p/kg in April, and was quickly followed by its rivals, wiping £100m off sector value. The Grocer 33 reveals this week that prices at the big four have all returned to 85p/kg.
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