Grocery competition drives down cost of supermarket basket

Price competition between supermarkets is at an 'all-time high'
Price competition between supermarkets is at an 'all-time high'

The cost of an average basket of groceries fell slightly last month, but intense competition between supermarkets is masking rising prices, figures suggest.

A basket of 35 popular items fell to £81.93 in April from £82.15 the previous month, with no item changing price by more than 4.5%, according to the mySupermarket tracker.

The total basket was 85p cheaper than in April last year.

Apples cost 1.4% less than in March, bananas were down 1.5% and peppers were 4% cheaper.

But groceries that continued to increase in price included breakfast cereals and fish fingers, both up 1.6%, and kitchen towels, which were 10p more expensive than in February.

The cost of 13 items fell, 19 increased and three stayed the same.

MySupermarket chief executive Gilad Simhony warned that the prices of many items could continue to rise.

He said: “Although the changes to the basket price are minimal, we are seeing a trend in the products that are continuing to increase month on month.

“The price competition between supermarkets is at an all-time high, and this is pushing many prices down as many retailers are using fruit and vegetables as a loss leader.

“We do expect to see a price increase in many of the ambient products in the coming months as manufacturers pass on the increase in costs they have been facing to the consumers.”

The report comes as GB based Morrisons posted better than expected sales in the first quarter after reaping the rewards of price cuts and strong Easter trading.

The supermarket said like-for-like sales grew 3.4% in the three months to April 30, ahead of analyst expectations and an acceleration on the previous quarter’s 2.9%.

Chief executive David Potts said: “We are improving the shopping trip in many different ways, which is making Morrisons more popular and accessible for customers.

“These new initiatives in-store, online, in wholesale and services are beginning to build a broader, stronger Morrisons.”

The company said its Price Crunch initiative has seen more customers come through its doors, with sales over Valentine’s Day, Mother’s Day and Easter particularly strong.

Mr Potts said the group is “working hard” to remain competitive, despite an increase in the price of food imports linked to the collapse in the Brexit-hit pound.