Action to contain cost of living pressures – groceries

The Competition & Markets Authority has issued an update on the action it is taking to ease price rises in grocery bills. In their press release issued on 15 May 2023, the CMA said:

As cost of living pressures have grown, the CMA has been working to understand how well markets in essential goods and services are working. Along with road fuel, we identified groceries as an early priority, and we started work earlier this year looking into unit pricing practices online and instore.

While global factors have also been the main driver of grocery price increases, and at this stage the CMA has not seen evidence pointing to specific competition concerns in the grocery sector, it is important to be sure that weak competition is not adding to the problems.

Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.

The prices that consumers pay for their groceries are the result of competition at three main levels of the market:

1. Competition between retailers, where consumers shop for their products.
2. Competition between suppliers who make the products and sell them to the retailers.
3. Competition between raw material providers who provide the inputs to food suppliers.

Given the need to provide findings swiftly, the CMA will do this work in a targeted way, focusing on those areas where people are experiencing greatest cost of living pressures.

This new phase of our work will therefore cover:

• First, completing work to assess how competition is working overall in the grocery retail market, drawing on publicly available data and other information.
• Second, in parallel, identifying which product categories, if any, might merit closer examination across the supply chain.

The CMA will engage with a wide range of industry participants, experts, and other stakeholder groups to inform our assessment. We will provide an update on this work over the coming months.