Retailers hit back at Healey’s ‘profiteering’ threat
Retailers have hit back at the Chancellor’s warning against profiteering, saying they will prove they have fought hard to keep food prices down during the Iran war.
Chancellor John Healey said at the weekend that the Treasury is prepared to crack down on any retailers which are taking Brits “for a ride” by using the Middle East conflict as a cover to hike prices.
The British Retail Consortium (BRC) – which represents the UK’s biggest retailers including Sainsbury’s, Tesco and Asda – has hit back at Healey’s threat, warning that supermarkets will resist any claims that they are profiteering from the war.
Jim Bligh, the BRC’s corporate affairs director, told City PM: “It’s not helpful for the Chancellor to label retailers as potential profiteers when it’s one of the UK’s lowest margin industries.
“That competition is also keeping food price inflation down – on which the government has done nothing to support the industry.”
Bligh said Healey risks provoking an industry backlash if he sets out plans to crack down on so-called “price gouging”.
“We’d keep demonstrating the strength of competition to the CMA and prove again there is no profiteering,” he said.
Writing for the Sunday Telegraph, Healey had said: “At home, we will be watching closely for any suggestions that customers are being taken for a ride at the pump or the till.
“Companies’ willingness to work with the government throughout this crisis has been positive, and there has been no significant evidence of so-called price gouging, but I want to be blunt in reassuring the public that our regulators have the powers to clamp down on it if it happens.”
Andrew Opie, the BRC’s director of food, said: “The government’s independent competition regulator has repeatedly found that fierce competition between retailers, not government action, has kept food prices as low as possible.”
Government ‘doing nothing’ on food inflation
The trade body pointed to three consecutive reports by the UK’s competition watchdog, the Competition and Markets Authority (CMA), which found that there was no evidence of profiteering among British grocers.
Food inflation has fallen in recent months, reaching 1.7 per cent in June, despite fears that the Iran war would cause supermarket prices to surge.
“Many of the additional costs facing retailers have been implemented by this government, including higher National Insurance contributions, increased packaging taxes and the continued failure to reform the outdated business rates system,” Opie added.
The Food and Drink Federation (FDF), which represents the industry’s 1,200 manufacturers, claims the sector has absorbed a 38.4 per cent hike in costs since 2020 and suffered a £2bn bill from regulation just last year.
“Despite this, businesses have worked hard to absorb costs wherever possible to keep food affordable for consumers,” said FDF director of strategy David Thompson.
Rachel Reeves, Healey’s predecessor as Chancellor, sparked fury by suggesting that retailers may be “price-gouging,” and even explored asking grocers to cap the prices of essential foods.
Stuart Machin, the chief executive of Marks & Spencers, had slammed this proposal as “completely preposterous”.
“I don’t think the government should be trying to run business. I think they should try and probably understand business better,” he said in May.