Wednesday, 7 November 2007

food hyperinflation rocks the uk

The Scotsman Tue 6 Nov 2007

16% surge in food bills as supermarkets pass costs on
to customers


THE cost of the family shopping run has rocketed by up to 16 percent over the last year, according to a new survey.
Prices at Tesco on a selection of foods went up 16 per cent in the year to October - nearly 6.5 per cent above the average rate of inflation.
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The cost of the same basket of shopping at Sainsbury’s went up by 11.8 per cent and by 8.6 per cent at ASDA.
The average increase across the three supermarkets was 12 per cent - nearly five times the average 2.5 per cent rate of inflation over the same period.
The shopping basket contained staple goods such as bread, milk, butter, cheese, potatoes, tea bags and corn flakes.
Tesco rang up the biggest increases for the basket of staple foods in the year up to last month, with the bill rising £3.55 to £25.70.
Scotland’s biggest retailer was followed by Sainsbury, which increased prices by £2.66 on the same items.
And ASDA - consistently voted the cheapest supermarket in polls - hiked its prices on the 24 item basket of necessities by £1.87.
The survey was carried out by consumer comparison site, which checked price increases on a weekly buy of basics for a family of four for the year.
The news came after government statistics showed that prices for many food items had increased, partly due to bad summer weather in the UK and a poor wheat crop globally.
Johnny Stern, the director of the shopping website, said: « Raw commodity prices have gone up worldwide, which is having an effect on prices.
« Supermarkets in the UK have decided they are not going to absorb the rising cost and are passing it on to the consumer.
« Different supermarkets have chosen to do that in different ways and on different products. »
Mr Stern added: « It’s really what supermarkets think they can get away with and they are reacting on a daily basis to that. »
« There is a certain amount of smoke and mirrors - the challenge to the consumer is to work out how to deal with this smoke and mirrors. »
Mr Stern said that staple items were traditionally regarded as loss leaders and competitively priced to tempt shoppers through the doors.
He added: « That was certainly true several years ago and that is what makes these figures so interesting.
« People expect staples to be priced at a reasonable figure - no-one expects them to be expensive.
« And people are going to assume that if prices have gone up in one supermarket, they probably expect them to have gone up by the same in another supermarket, which is not always the case. »
A spokesman for Tesco agreed the that more expensive raw materials had played a part in increasing prices.
But he described the selection of goods in the survey as « small and arbitrary » and unrepresentative of the firm’s overall price policy, and said shoppers should check the company’s online price comparison site.
And he claimed: « This independently-compiled data proves that Tesco is consistently cheaper across a representative range of products. »
A spokesman for ASDA added: « Floods have definitely increased prices of things like vegetables and dairy products.
« It’s always as a last resort we would pass this on to our customers. This study illustrates that when we do that, we are lean in terms of passing the costs on. »
THE Church of England has urged shoppers to question who subsidises two-for-one offers in supermarkets.
The move came in a new report accusing major food retailers of selling cheap food at the expense of farmers.
The pursuit of low-cost food, coupled with the big supermarkets’ buying power, is putting farmers’ livelihoods at risk and could threaten our self-sufficiency in basic foodstuffs, the report, Fair Trade Begins at Home, supermarkets and the effect on British farming livelihoods, has warned.
Launching the study, the Rt Rev Michael Langrish, Bishop of Exeter and chairman of the rural strategy group of the Church’s Mission and Public Affairs Division, said although the benefits of the supermarkets were widely recognised, he believed the costs and the risks of food production were not being equally shared.
He said: « Farmers seem to be unwilling to complain or to expose these practices for fear that their produce may be boycotted by the major retailers. »

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