Shoppers overcharged on branded baby formula, pet food and beans, says watchdog
Shoppers have been overcharged for branded goods such as baked beans and baby formula as some suppliers have pushed up prices faster than their costs have risen, according to the competition watchdog.
The Competition and Markets Authority (CMA) has examined 10 product categories and found that most inflation had been caused by suppliers passing cost increases on to customers.
It said around three-quarters of branded suppliers of infant formula, baked beans, mayonnaise and pet food have increased their profitability and contributed to food prices increasing. But in most cases shoppers can find cheaper alternatives.
Food price inflation continues to be at historically high levels, despite falling to 10.1 per cent in October 2023.
Brands told the CMA that when their costs started to fall they would offer promotions to customers, rather than cut the standard costs of their products.
Everything from energy prices to fertiliser costs to the wages they pay their staff have soared for many food suppliers.
But own-label products often provide cheaper alternatives with suppliers of these products earning lower profit margins.
“In all but one of the relevant product categories the CMA looked at, as food prices have risen, many consumers have switched away from brands towards own-label alternatives, or reduced their consumption, leading to a decline in brands’ market shares and profits,” the watchdog said in a statement.
The CMA said that it would launch a new review in January into supermarkets which only offer discounted prices to customers who sign up to their loyalty schemes.
In recent years shops including Tesco and Sainsbury’s have exclusively offered loyalty card holders significant discounts on some products in their weekly shop.
The CMA is also planning a separate investigation into the baby formula market, where just two companies account for 85 per cent of sales.
It said families could make significant savings of more than £500 over the first year of a baby’s life, through buying cheaper baby formula options but may not always have the right information to make effective choices.
Sarah Cardell, chief executive of the CMA, said: “Food price inflation has put huge strain on household budgets, so it is vital competition issues aren’t adding to the problem. While in most cases the leading brands have raised prices more than their own cost increases, own-label products are generally providing cheaper alternatives.”
Ms Cardell said the picture is different in relation to baby formula where there is little evidence that people are switching to cheaper products.
She added: “We’re concerned that parents may not always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices.”
