Asda Chairman Lord Rose warned: “You can't interfere with the markets, the markets will control themselves.” Photo: Paul Grover for the Telegraph
The Asda chairman lashed out at ministers' “clumsy” plans to impose price caps on supermarkets amid fears that soaring food inflation will take root.
Lord Rose, who previously also served as Chairman Signs & Amplifiers Spencer and Okado, warned that the government needed to be careful about the “unforeseen consequences” that could arise from meddling in food pricing.
He said: ” I've been in the retail business for 50 years and there have been all sorts of schemes from all kinds of governments as to what they think we should be doing to control the market. You cannot interfere with the markets, the markets control themselves.”
This comes after the Competition and Markets Authority (CMA) said it would evaluate how suppliers and supermarkets make pricing decisions as part of a broader investigation in the sector.
In an open letter to supermarkets, the CMA said that it will also consider whether shortages of suppliers for certain foodstuffs are driving up prices, and whether there is evidence of similar trends in other countries.
So far, the CMA said it has not seen any evidence of specific competition problems.< /p>
Analysts at City also sounded the alarm about entrenched inflation in the UK on Tuesday, warning that the Bank of England will have to keep interest rates higher than in other advanced economies because it has failed to control rising prices.
p>2605 UK inflation
The Telegraph reported this week that the prime minister is preparing proposals to impose retail price caps on basic food items such as bread and milk to help deal with the rising cost of living.
According to the Office for National Statistics ( ONS), food inflation reached 19% in April, the highest level in more than 45 years.
Lord Rose said Asda supermarkets have kept the prices of clothing, food and electronics low for the real world at an “unprecedented” level and insisted that it was doing a “very good job for consumers”.
He made the comments as Asda said it had struck a £2.3bn deal to buy most of the UK and Irish operations of gas station operator EG Group. Both companies are owned by the brothers Issa, Mohsin and Zuber.
Lord Rose, who also led the official campaign to save the EU that later turned into chaos, added: “If the government wants to start doing relatively clumsy things, then they have to be careful about the unforeseen consequences… Let the shopkeepers do it. what they do well is running stores.”
He said that Rishi Sunak's price capping plans were “pretty retrospective” and instead supermarkets should be indebted for their work to keep prices on low level. maybe.
The British Retail Consortium, which represents all major supermarkets, said the proposals “won't affect prices one iota.”
Official data released on Tuesday suggests that the company's earnings are not driving up prices, suggesting that so-called corporate “greed” is not to blame for the surge in consumer prices.
Citi analysts speculate that Rishi Sunak may start offering mortgage subsidies to reelected homeowners as he fights for reelection. Photo: Daniel Leal/Pool/REUTERS. last year. This figure is also slightly below the pre-pandemic average.
However, the latest data is retrospective, and Bank Governor Andrew Bailey suggested that high supermarket prices of late were due to food producers “recovering” their profits.
Analysts at Bank of America have warned that the UK has “an ingrained inflation problem” that can only be addressed by a sustained decline or keeping interest rates “at higher levels for a longer time than in other developed countries.”
Inflation was at 8.7% in April. This is well above the Bank of England's 2% target and the highest inflation rate among the G7 countries, along with Italy.
In a note to customers, Bank of America emphasized that since most people fix their mortgages, a number borrowers have been somewhat insulated from the immediate impact of the rate hike, which will have less of an impact on consumer spending.
Meanwhile, Citi analysts have suggested that Mr. Sunak may start offering mortgage subsidies to struggling homeowners as he struggles for re-election, and Goldman Sachs warned that inflation is unlikely to return to the bank's 2% target before the end of 2025.
Ahead of next year's general election, Citi said voters are likely to support the Conservatives The party “at least partially responsible” for the price spike after Liz Truss's ill-fated mini-budget last fall.
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