Asda has said it will spend £73m to cut or freeze prices on 100 products, while Morrisons says it will cut prices on 500 products as Britain’s supermarkets fight to keep customers amid rising inflation.
The Morrisons products subject to reductions represent 6% of its total sales, and include items such as eggs, cereal, cooking sauces, chicken and sausages. Asda said its price cuts would be on fresh fruit and vegetables, fresh meat, rice and noodles.
Recent increases in oil prices, global supply chain disruption caused by coronavirus lockdowns and Russia’s war on Ukraine have fuelled soaring inflation across the world, putting a strain on household finances.
Cost of living crisis: how are UK supermarkets limiting price rises?Read more
British supermarkets are trying to preserve their market share, and the big four – Tesco, Sainsbury’s, Asda and Morrisons – are watching the growing competition from the German discounters Aldi and Lidl. Although there are concerns over the economy’s momentum, supermarkets are also competing for staff amid a tight labour market.
Asda on Monday said it will increase pay for workers to £10.10 an hour from July, matching earlier increases from Tesco and Lidl.
Retail pay chart
Asda had faced criticism from the GMB union for having the lowest-paid workers of the big chains, at £9.66 an hour. Nadine Houghton, a GMB national officer, said the pay increase was “fantastic news”.
“Retail workers, predominantly women, face the reality of living with low pay every day,” she said. “Employers everywhere need to step up and properly reward these key workers who keep our high streets running.”
Asda’s price-steadying measures will coincide with the launch of its new “Just Essentials” products to replace its budget “Smart Price” range. Asda is spending £45m on introducing the products from next month, although it is also facing a potential problem after its rival Waitrose threatened it with legal action, arguing that the branding impinged on its own “Essentials” range.
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David Potts, the Morrisons chief executive, said: “We know that our customers are under real financial pressure at the moment and we want to play our part in helping them when it comes to the cost of grocery shopping. These price cuts will have a noticeable and long-term impact on our customers’ budgets and demonstrate our commitment to offering them the best possible value.”
Mohsin Issa, the co-owner of Asda after a debt-funded takeover last year, said: “We know that household budgets are being squeezed by an increasing cost of living and we are committed to doing everything we can to support our customers, colleagues and communities in these exceptionally tough times.”
He added that Asda’s move was an “unprecedented action to give families some additional stability and certainty in their weekly shopping”.