UK: Supermarket price hikes

UK supermarkets are raising food prices ahead of input cost inflation and faster than their peers in Europe and the US, a new report from UBS has revealed.

Food inflation stood at an annual rate of 4.6% in February, while the Eurozone average totalled 1.8% and the US average stood at 1.5%, the investment bank highlighted in a research note yesterday (28 February).

"UK food prices are rising more rapidly than most other OECD economies' food prices and have significantly outstripped food retailers' cost inflation," UBS analysts wrote.

UBS suggested that UK supermarkets could be using price hikes as a means to boost their profit margins on food sales. However, the bank warned, in doing so major retailers could prompt a government inquiry into their pricing actions.

"This could allow UK politicians to suggest that food price inflation is 'unfair' or 'excessive'," the note suggested.