To not really understand the increase in the cost of food and to think that supermarkets or just added their own price increase?

[mrsfindlay]

Just that really...are they just exploiting the cost of living crisis ? How can prices be rising so significantly ? Am I just ill-informed or a conspiracist?

Same applies to banks, they're quick to increase mortgage % rates and beyond sloth-like on tranquillisers to increase savings % rates .

If you have some time to spare read this long article from The Guardian. It’s about fish and chips but any businesses dealing in food have similar issues. My husband has a shop, fortunately not food related, but their energy costs have skyrocketed and as someone mentioned there is no price cap on business utilities.

https://amp.theguardian.com/food/2023/jul/20/a-funeral-for-fish-and-chips-east-neuk-fife-anstruther-scotland

I think the demise of Wilkinson is a mixture of the overall reduction in high street footfall, growth of out of town retailers like BM, the move to online shopping.

With supermarkets their costs have gone up but they are also taking the opportunity to have a price re-set. There is less choice on the shelves so customers have to accept the prices.

Ah yeah. I forgot they were/are plc!

This.

Plus very hot weather in countries that usually supply our salads and fruit are pushing prices up.

A friend who is an arable farmer (wheat, barley, oil seed rape) is dealing with a wet harvest. Grain, once harvested, has to spend longer in the grain dryer, to get it to milling condition. It needs more energy to bring down the moisture content which pushes up her costs, and delays thing.

So regardless of what is happening to Ukrainian grain exports, UK wheat, and therefore flour, will cost more.

This. I do consultancy work for industrial sites. One place saw their energy bill go from something like £800k pa to £4 million. That adds a lot of cost to the bottom line.

Small cafes, takeaways etc could see rises from under £10k to over £50k. That's a decent income for the owner gone in an instant unless they significantly increase their prices and keep the same level of trade, which they really will struggle with because this is the very sort of thing people are cutting back on.

Then the other factor is interest rates. Just like people's mortgages have increased, so will business finance and there is a lot of commercial debt out there, which will get a lot more expensive. Retail and hospitality especially will be affected, lets see where we are the the chain pizza restaurants in a year or two's time.

It's a perfect storm in a lot of ways and will likely get worse before it gets better because the impact hasn't fully hit yet for businesses that haven't had to renew energy and finance contracts.

Supermarkets and retailers work off profit margins in % not cash so if their cost of goods goes up they’ll increase their prices to maintain the % profit not cash profit.

eg a loaf of bread used to cost 60p for them to buy and they sold for £1 at a 40% profit, if that item goes up to 70p to buy the new RSP (retail selling price) would increase to £1.17 not £1.10 to maintain the 40p cash profit.

add in the board will expect YoY increase in profit for shareholders so they have to bring in more real cash than the previous year.

ways to achieve this are less goods for the same price point eg reduce the size/weight of goods, increase RSP prices, squeeze suppliers, reduce quality of goods, or reduce staff overheads. The big retailer I worked for used to do all of these. the action compounds the problem, less people buy so more cash profit to find.

Supermarkets are well down any list I would have of those who exploit inflation increasing.

Banks margins between mortgages and savings, broadband cost increases, anyone with hidden charges, all come to mind.

Big businesses generally have more buying power and the unprofitable stores are often supported by the profitable ones.

But there are lots of big businesses that have gone bust recently - Wilko, New Look, TopShop, Thorntons - and Boots are closing loads of stores too.

Yes this and the energy costs are bumped up at every stage. Plus the reduction of commodities coming out of Ukraine, due to Putin squashing it

Everything that has gone up for us as individuals has gone up for businesses too. Utilities going up and the government removing those caps have effected absolutely everyone, and it knocks on to everything. Insurance for businesses? Costs more, because their running costs are higher. Actual manufacturing? Costs mor because the machines cost more to run. Fuel to transport goods costs more. It's never ending.
That and the absolutely ridiculous increases due to Brexit and the new found difficulties importing goods, it's a perfect storm.
All avoidable of course...

Regardless of the three Fs supermarkets are still raking in bigger and bigger profits so I am inclined to think that yes their greed is a big factor. They could absorb many of the costs and still make huge profits but chose not to. Shame on them.

Why should they, though? They're not charities.

I work in a food factory and whilst the supermarkets are trying to force us to maintain prices, its impossible. Minimum wage has increased, electricity has tripled, all our packaging costs have went up, plus all our other suppliers have increased their prices because they're facing the same struggles. The only staff that have had a payrise this year are those that were on minimum wage, everyone else was told tough so we're losing staff everywhere.

I think both Tesco and Sainsbury’s have said they won’t be increasing profits this year as they’re absorbing as much as they can of the cost price increases. That will force the others to do the same or they won’t be competitive.

Food manufacturers make higher profit margins than supermarkets, and banks and energy companies are reporting record profits, so I’d take my outrage there first.

Also read the thread about shop lifting. They needs covering too

Can you explain how this works?

Supermarkets don't make 'huge' profits. Tesco made £1.5 billion on sales of £67 billion, or 2% profit. Sainsbury's made £0.7 billion on sales of £35 billion, likewise 2% profit. That 2% was before tax.
No way can that be called a huge margin.

Just to put Supermarkets profits into context, Mumsnet Limited last results showed sales of £6.9 million and an operating profit of £2.3 million, a rate of 33%.

With prices going up almost daily, I feel there is some profiteering by the big supermarkets, plus they seem to have reduced staff, and turned the lighting down to gloom level.
The price of a standard size tin of Heinz soup was £1.70, this simply cannot be justified, so both Heinz and the supermarket are in on it.

See the other thread about open shoplifting and the police not caring a jot. Someone has to pay for the freebies being taken by thieves.

Heinz is a big experiment to see how expensive they can make their awful products before people finally realise that there's all manner of alternatives that taste better and cost a lot less.

Don't fall for it.

I get that costs are rising, but every week there are increases, 50p here and there or more. My DS18 has taken a shine to my breakfast cereal. It’s currently £3.40 a box in Sainsbury’s, but now he’s scoffing it too, I’ve been buying two boxes a week. I mean, how offensive is that? Had a look on Amazon this week and I can bulk buy 6 boxes of the same brand for £12, delivered. So I did. Someone is taking the piss.

That's because the seller on amazon has completely different outgoings compared to physical supermarket.
Plus I found that the super good offers are oftem very close to best before date so obviously they get them somewhere at stock clearances

There are very definite global price pressures that are increasing food costs massively. They've been listed already.

Of course, we cannot entirely trust the supermarkets to be fair on prices, but if they are profiteering we will see that when they announce their annual profits.