Supermarket competition drives down produce prices

Increasing price competition between the big supermarkets is continuing to drive down the non-promotion price of fresh produce.

Latest figures from Kantar Worldpanel show the British grocery market growing in value by just 1.9 per cent for the 12 weeks ending 27 April - the lowest level for at least 11 years, due to price competition among retailers and a resulting drop in inflation.

Kantar Worldpanel director Edward Garner said: "There are clear signs that the major supermarkets are reviewing their strategies in the face of increasing competition. We're now seeing the big four moving away from 'here today, gone tomorrow' promotions and toward everyday low prices - with Tesco, Morrisons and Asda all announcing price cuts."

These three, as well as the Co-operative, have all recently adopted slogans emphasising their everyday low prices, he added, giving them more in common with discounters such as Aldi, which saw a record 36 per cent growth for the period.

By contrast, Morrisons saw a fall in like-for-like sales of more than eight per cent for the 13 weeks to 4 May. This coincided with its announcement of price cuts averaging 17 per cent on some 1,200 everyday items under its "I'm Cheaper" programme, such as vine-ripened tomatoes cut from £1.69 to 99p and a three-pack of large brown onions down from £1.39 to 99p. It said sales of broccoli tripled following an earlier price cut.

Sainsbury's has seen like-for-like sales, excluding fuel, grow by just 0.2 per cent for the year to 15 March. Outgoing chief executive Justin King said the retailer would "match the price activity of our competition".

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Professor Geoffrey Dixon

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