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Tesco seeks supplier price cuts indicating rocketing food inflation may start to ease

By Nagasunder in UK Business News, posted April 10, 2023

Tesco has begun to press its suppliers for price reductions, giving an early indication that the rising weekly grocery expenses could be beginning to slow.

According to The Sunday Times the supermarket giant, which has dedicated staff monitoring their supplier costs, is looking to begin lowering prices for customers on certain products where it believes inflationary pressures have eased.

Ged Futter, director at consultancy firm The Retail Mind said: “Tesco are trying to lead the supermarket industry on deflation. They are asking for price reductions — but suppliers want price increases,”.

Food inflation reached a 45-year high of 18 percent in February. Which was way above the standard inflation rate of 10.4 percent. Meaning that customers Easter shopping for just basics was 23 percent more than a year ago.

David Sables, head of supplier consultancy firm Sentinel Management Consultants said: “The pressure on suppliers to decrease prices is going to come thick and fast,”

“Supermarket buyers are flagging that they expect prices to be brought down, but it’s early days. Prices won’t drop in a straight line.”

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Tesco chairman John Allan stated in January that it was "entirely possible" that food producers were using inflation as a pretext to raise prices above what was necessary, thereby affecting the poorest members of society.

The supermarket giant received outrage last month when it announced plans to implement a supplier charge to assist in paying the increased costs of operating online.

A spokesperson said: “We are committed to fair and transparent partnerships with our suppliers, and for seven consecutive years suppliers have voted us No 1 retailer in the independent Advantage survey. We are working hard to keep the cost of the weekly shop as affordable as possible.”

Source: Retail Gazette