UK Lawmakers Probe Supermarkets’ Power as Food Prices Soar

(Bloomberg) -- UK Members of Parliament are launching an inquiry into the influence of supermarkets and manufacturers on food prices as Britons struggle with an enduring cost-of-living crisis.

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Lawmakers will investigate how profitability and risks are shared across the UK food supply chain and how the government responds to them, according to a statement on Friday from the cross-party Environment, Food and Rural Affairs Committee. They’ll also look into the nation’s diet and national food security.

Other issues under scrutiny as part of the “farm-to-fork” probe will include the impacts of imports and global commodity prices, and low-income families’ access to healthy and affordable food.

Britons are struggling with the fastest food price inflation since the 1970s, and the Bank of England on Thursday said it’s displaced energy as the biggest cause of inflationary concern. Healthy diets are getting out of reach for more Britons, while shortages of items from eggs to salad ingredients in recent months have shone light on how food is sourced, raising questions over whether farmers are compensated enough for their produce.

“We know that consumers are paying higher prices,” EFRA Committee Chairman Robert Goodwill said in the statement. “The question is: are the other parts of the supply chain unduly benefiting from that, or are some of them also feeling the squeeze?”

Negotiations between retailers and producers have become fraught in recent months as both parties seek to protect their margins from growing costs. British supermarkets’ profitability have taken a beating as they compete to keep prices low for shoppers, especially driven by pressure from the discounters Aldi and Lidl, which are growing market share. Tesco Plc, J Sainsbury Plc and Asda all reported a decline in profit in the past year.

Still, supermarkets have started to cut the price of some basics as they say they are seeing some signs of deflation, while promising they aren’t squeezing suppliers.

The committee invited written submissions from farmers, retailers, consumers, the government and other interested parties by July 28.

--With assistance from Andrew Atkinson and Katie Linsell.

(Updates with more on supermarkets from the sixth paragraph.)

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