Grocery prices have climbed by 0.4% since last month, despite supermarkets shouting about their latest rounds of price cuts.
However, The Grocer Price Index, which monitors 100 commonly bought groceries across the big four, also reveals that prices have fallen 0.5% year-on-year since August 2004. The upturn in the past month - which comes despite
Sainsbury cutting prices by 5% year-on-year - is attributed to retailers recognising rising costs of production and raw materials for suppliers.
Suppliers have complained that the deflationary pressure caused by retail price wars was unsustainable in the current economic climate.
Manufacturing analyst David Hallam at Williams de Broë said there had been less price pressure on suppliers, which could suggest an improvement in suppliers’ terms. However, there was no real evidence that price increases were finding their way back to suppliers.
Sainsbury has begun benchmarking 200 products against Tesco’s prices and advertising the similarities. Its Tesco Price Check initiative is being used on a wide range of products and is part of an extensive in-store marketing campaign, Ways to Save, which highlights its 2,000 price cuts since January as well as offers.
Asda has also stepped up the roll-out of ELDP+ this month to include details of customer savings on its till receipts. As highlighted in The Grocer last week (p4), Asda, along with its rivals, has also been ramping up its multibuy activity including a move into bogofs, which began in May.
The Grocer Price Index