The producers of certain branded goods have hiked their prices beyond inflationary cost increases
The price of certain branded staples, including baked beans, mayonnaise, baby formula and pet food have risen faster than their cost price, according to a watchdog review.
Energy prices have skyrocketed in recent years, fuelling high inflation and causing a spike in production costs for most items.
But the Competition and Markets Authority (CMA) said it found evidence that some branded producers were making extra profits on top of the price rises caused by increased costs.
Three in four companies that make goods such as baked beans, mayonnaise, pet food and baby formula have put their prices up beyond the additional costs of making the items, the watchdog said, and shoppers were switching to cheaper alternatives as a result.
The CMA also plans to review supermarkets that only offer discounted prices to customers who sign up to their loyalty schemes.
Shops like Tesco and Sainsbury's have launched schemes which allow loyalty card holders to receive significant discounts, which the CMA says "raises a number of questions about the impact of loyalty scheme pricing on consumers and competition."
”Food price inflation has put huge strain on household budgets, so it is vital competition issues aren’t adding to the problem," CMA chief executive Sarah Cardell said.
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The CMA will also probe the baby formula market, as prices have risen by 25% over a two-year period.
“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,” Ms Cardell said.
Inflation has been falling in recent months, with the figure for October falling more than expected to 4.6%, which is the lowest in two years. But while prices are increasing at a slower rate, it is still unlikely that food and other staples will become noticeably cheaper.
"While we are seeing a decrease in inflation, it’s important to note that the decrease in food prices is much less pronounced, prices are still 10.1% higher than this time last year – where things were already approaching unprecedented levels," Martyn James, consumer rights expert, told ITV News.
And those products that are the same price may not be quite as good value as they were before the cost-of-living crisis.
"We’ve [also] seen the ‘shrinkflation’ that we’ve all become aware of in recent years. But in many cases, ‘skimpflation’ – where the underlying quality of goods is reduced or their key components cut down – seems much more prevalent than before," Mr James said.