Tag Archives: supermarket price wars

David vs Goliath: the supermarkets’ battle for the consumer

Tim Pike, Juliette Healey and Carleton Webb

Price inflation for food and drink rose sharply between July 2016 and July 2017, going from minus 2.6% to +2.6%. But could those increases have been even steeper?  In this post we examine the evolution of the UK supermarkets sector. Monitoring their pricing behaviour can be important for understanding short-run inflationary developments given the supermarkets’ high share of imported goods, the general volatility of food prices, and the fact that the largest four supermarkets account for over  a quarter of UK retail sales.  We find that intense competition in the sector has slowed pass-through of higher import prices following sterling’s recent depreciation.  We think that competitive pressures will bear down on food price inflation for the foreseeable future, despite pressure on supermarkets’ margins.

Continue reading

2 Comments

Filed under Macroeconomics