Cost of living: Shoppers ‘overcharged’ for branded goods including baby formula and baked beans, watchdog finds
Suppliers of branded goods including baked beans and pet food have “pushed up prices by more than their costs”, according to the competition watchdog.
The Competition and Markets Authority (CMA) has been examining 10 product categories in a bid to see if shoppers, already struggling amid the continuing cost of living crisis, are being ripped off.
It said that while some increases were justified, to cover rising costs from elements such as energy and ingredients, there was clearly some profiteering – a finding the consumer group Which? described as “shocking”.
“The evidence collected by the CMA indicates that, over the last two years, around three-quarters of branded suppliers in products such as infant formula, baked beans, mayonnaise, and pet food – have increased their unit profitability and, in doing so, have contributed to higher food price inflation“, the regulator’s statement said.
It went on to explain, however, that the shifts were likely to have backfired somewhat as shoppers had clearly switched to cheaper, supermarket own brand, alternatives in a bid to save cash.
The regulator will hope that the competition will help prices of branded goods come down.
But brands told the inquiry that when their costs started to fall they would offer promotions to customers, rather than cut the standard costs of their products.
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‘This cannot carry on’
The CMA said that more study was needed, including in the baby formula sphere that has been the subject of work by Sky News and seen the World Health Organisation declare that families were being “exploited”.
However, it did find evidence of unjustified price increases, with costs to consumers up by 25% over two years, and cited concern that two companies, Danone and Nestle, control 85% of the market.
Calls for baby formula price cap will rise
By laying out the simple fact that the formula milk price rises parents face in the shops do not equate with the “input costs” of making the product, the CMA is putting the formula industry firmly in the spotlight.
It’s already being called out as profiteering by campaigners, but the regulator is now singling out the formula industry for further interrogation.
It says quite clearly: “Evidence suggests that branded suppliers of baby formula have also increased their prices by more than their input costs.”
This year Sky News has tracked the desperate measures some families are having to take to feed their babies – it’s upsetting, stressful and ultimately unsafe for babies.
Experts have warned the high prices have put the nation on the brink of a “public health crisis” and earlier this month the World Health Organisation told Sky News that families were being “exploited” on pricing.
The CMA also highlights that the formula milk market is different to other food products – it is dominated by two multinational manufacturers – and that the public health messaging around it needs improvement for parents.
All the brands on the market meet minimum nutritional standards. Whether you buy the cheapest brand from Aldi for just under £10 or the most expensive at nearer £20.
The next stage of the CMA’s work will take months, but it appears determined to establish what needs to change. The calls for a price cap are only likely to increase.
A spokesperson for Danone UK & Ireland, the makers of the Cow & Gate and Aptamil brands, said it had minimised price increases and launched smaller, lower-priced pack sizes to help parents’ budgets.
“In Danone’s experience the formula milk market is competitive. We are committed to best practices to maintain this and will work constructively on ways we can continue to deliver value and innovation to parents. We will also continue to engage with the CMA over the coming months,” they said in a statement.
A Nestle spokesperson told Sky News: “Our goal has always been to keep products affordable and accessible for parents while still paying fair prices to our suppliers, including farmers.
“There have been significant increases in costs but we have been working to cut our costs wherever possible and only increase prices as a last resort.”
The CMA also declared that it was going to review supermarket loyalty schemes in the next phase of its investigation.
Front and centre of that is the offering of promotions only to customers who sign up to their loyalty cards.
The industry group for manufacturers responded to the CMA’s conclusions by suggesting that the pricing reflected value.
Karen Betts, chief executive of The Food and Drink Federation said: “Across our sector margins are at a 40-year low, insolvencies have doubled and investment has dropped by more than a third.
“Shoppers in the UK can take some comfort from the fact that, even with the levels of inflation we’ve seen in recent months, food and drink prices here remain lower than average EU grocery prices.
“The UK grocery market is highly competitive and offers a wide choice of products at a range of prices.
“Where branded products are more expensive than own-brand, this is because of the constant investment in quality and innovation that brand-owners make.
“If that investment doesn’t happen here in the UK, the amount of imported food and drink will certainly go up – with consequences for jobs, competitiveness and food security.”
But Sue Davies, head of food policy at Which?, said of the CMA’s findings: “Its evidence reinforces Which?’s concerns that shoppers relying on convenience store branches of the big supermarkets, which rarely stock the cheapest own-brand ranges, may struggle to find more affordable food.”
She added: “It’s positive that the CMA is set to review supermarket loyalty pricing as a recent Which? investigation found these deals aren’t always as they seem.
“In September we asked the regulator to look at whether supermarkets could be hiking ‘regular’ prices to make it appear that loyalty scheme customers are getting a better deal than they really are.”
The regulator issued its update after previously finding that higher prices in stores were not the result of weak competition between supermarket chains.
The watchdog did, however, demand tighter rules over so-called unit pricing – costs per item covering versions of the same product – to bolster price transparency.
It also previously found that supermarket fuel operators had charged motorists an extra £900m in 2022 by raising their margins on both petrol and diesel sales.
UK
Reeves should be wary of expecting surprise inflation good news to last – with tax rises yet to bite and Trump tariffs ahead
A fall in December’s CPI inflation of 0.1 percentage points to 2.5% is marginal, but by being below expectations it delivered an above-expectations boost to Rachel Reeves.
The chancellor has been under intense scrutiny for the last week as UK borrowing costs have risen (in line with US and European peers) and the value of the pound has fallen.
While this has presented a political headache rather than the economic crisis presented by the opposition, it is no less real for a government that has made growth, stability and fiscal probity a priority.
Money blog:
What inflation drop means for you and economy
Strikingly the moves against the UK came unprompted by any fresh data to trigger a lack of confidence in the bond and currency markets.
This week that changes, with December’s inflation figures today followed on Thursday by GDP numbers for November.
In that context, this morning’s surprise on the upside will have been welcomed at the Treasury, particularly when the underlying numbers are analysed.
Good news from underlying figures
Core inflation, which strips out fuel and other volatile elements, fell to 3.2% from 3.5% in November, and services inflation, a key metric for the Bank of England‘s calculations, dropped 0.6% in the month to 4.4%.
Both of those falls were larger than consensus expectations and may be a sign that the ‘sticky’ inflation the Bank has consistently warned is staying its hand may be falling back.
The markets appear to think so, with expectations of a rate cut at the next Monetary Policy Committee meeting on 6 February increasing from 62% before publication, to 83% 90 minutes later.
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Sky’s Kay Burley speaks with chief secretary to the Treasury Darren Jones about the inflation figures
Warning uplift could be temporary
Borrowing costs also eased in light of the figures, with the 10 and 30-year gilt yields, which have seen 16 and 28-year highs respectively in the last week, falling back as markets opened.
If that suggests a measure of perspective returning to the UK, the chancellor still faces genuine challenges.
With the cost of servicing debt elevated, her fiscal rules remain in peril, and difficult decisions on spending will follow if they bust the OBR spreadsheet in March. And she cannot evade responsibility for loading £25bn of employment taxes on business without demonstrating that it will not, as many claim, depress growth.
In a note this morning, Pantheon Economics said it expects those measures to erase today’s good news on inflation.
The economic intelligence firm said: “Looking ahead, we expect headline inflation to rise to 2.8% in January, and then 3.2% in April as energy deflation eases, as a range of government administered and inflation-indexed prices rise and underlying services inflation persists.”
What next?
Ms Reeves will spend the next three weeks making the case for her economic plan, with a trip to the World Economic Forum in Davos next week followed by a speech on growth at the end of the month, and further staging posts in the industrial strategy, similar to the AI announcement this week.
All of which may reassure the world about Britain’s prospects, but still may not be enough.
US inflation figures, published later on Wednesday, are expected to show an increase, which may push yields up further.
And in five days Donald Trump will be in a position to begin implementing trade and tariff policies which are expected to be inflationary.
If the last week has demonstrated anything, it is that the US exerts a gravitational pull on markets the UK cannot escape.
“Have you ever thought about going on ‘the pen’?” My friend texts me.
I’m in bed, doomscrolling and my social media feed is full of hot takes about Ozempic. Insanely beautiful and glossy people are telling me why I should or shouldn’t take weight loss drugs.
Warning: This article contains details of body image and weight loss that some people might find distressing
Normally in January, everyone is talking about who’s going sober or trying (and failing) the latest viral health challenge.
But this year the hot topic is “who’s going on the pen?” – the weekly injection that is now widely used for weight loss.
There’s no denying that 2024 was a breakthrough year for weight loss drugs. Boris Johnson and Elon Musk are just a few of the celebrities who have announced they have taken it.
Elon Musk says he has taken weight loss drugs
Robbie Williams even made headlines joking he’d lost his “arse” due to Ozempic. “Now it just looks like the place where you put a credit card,” he quipped.
It’s not just celebrities and TikTok creators jumping on the weight loss drug hype. According to Simple Online Pharmacy, more than 500,000 people in the UK are now taking one of the few weight loss drugs, with experts predicting a nationwide fall in obesity rates as a result.
Even friends who didn’t seem like they would meet the medical criteria for the drugs were tempted. And I can’t lie, so was I. What happened to body positivity, I wondered, as I typed ‘How to buy weight loss drugs’ into my phone.
‘Ozempic changed my life’
Marketed as Ozempic, Wegovy or Saxenda, these drugs are administered via a weekly injection that mimics GLP-1 – a hormone that helps regulate hunger and slow digestion. It is only available with a prescription and online pharmacies have certain checks to ensure you meet the criteria.
Depending on your weight, some weight loss drugs can be approved for use alongside exercise and diet to manage weight loss – if your Body Mass Index is 30, or you have a BMI of 27 and above but have pre-existing medical conditions.
For people who medically qualify for this drug, it can be life-changing. Helping with weight loss and reducing the risk of heart attacks, strokes, and heart failure. The UK government is even proposing to use weight loss drugs to help tackle obesity and get people back to work.
Meranda said the medication changed her life
Meranda, a law firm administrator, lives in New York. After seeing celebrities using Ozempic, she went to her doctor and asked for the drug. Now, she has lost over eight stone and counting.
She was always an “active fat person”, she explained, but “never considered weight loss before”. “Ozempic totally changed my life,” she said, her smile radiating through the video chat.
But what happens when a drug that can be transformative for the people who need it, ends up in the hands of someone that doesn’t?
‘I started going in and out of fainting’
A simple internet search revealed a raft of online pharmacies advertising the drugs, including Superdrug and Simple Online Pharmacy.
I filled in some personal details and my health history. Then it asked for some pictures to verify my weight. I didn’t meet the BMI criteria, so I increased my weight on the form. Then I uploaded my pictures and pressed submit.
A couple of days later, I was approved by both online pharmacies.
I was genuinely surprised. It seemed pretty quick, considering I only submitted my application a couple of days ago.
If I could get my hands on it that easily, I wondered how many other people were taking it under the radar without the right supervision.
If you take the drug without being prescribed it, the side effects can be brutal.
Dr Vicky Price is seeing the effects of the drugs in A&E
Consultant Vicky Price has seen it first-hand.
A consultant in Liverpool A&E, she has dealt with patients who’ve got the drug from online pharmacies after “not being truthful about their weight because they’re so desperate”.
At first, Dr Price said these cases were rare but then as the year progressed, numbers started rising, until it felt like she was seeing someone in that position almost every shift.
The symptoms they exhibited ranged from vomiting and diarrhoea to feeling lethargic and being dehydrated. Some even appear to have gone into a “starvation process”.
Many were put on IV fluids for days.
What did all of them have in common? Dr Price said none of them were obese.
Laura* knows what it’s like to have an adverse reaction to weight loss drugs.
Getting weight loss drugs online is easier than it should be
After hearing about celebrities and friends using them with success, she decided to try it. At first, she experienced no side effects but then one night at work on a night shift, she started to feel “dizzy, clammy and shaky”.
After trying to eat something she started “vomiting and going in and out of fainting”. She ended up in A&E, on a drip and felt “terrified”.
Changing the rules
I spoke to Superdrug and Simple Online Pharmacy and asked them why I was able to lie about my weight and be approved for Wegovy.
Superdrug said: “The safety and well-being of patients remain our top priority… all medical consultations between a patient and healthcare professionals relies on the integrity and honesty of patients.”
Prescribing protocols are “regularly reviewed and new measures are implemented where required to continue to strengthen the integrity of these services”, the firm added.
Since my prescription was approved Superdrug has introduced “enhanced assessments” and will require new patients to submit three date-verified photographs.
Simple Online Pharmacy said: “We take clinical care very seriously and have numerous checks and protocols in place for prescribing.”
The pharmacy is carrying out a full review into my case and says it “constantly” seeks to enhance its ability to “identify falsified patient information”.
After taking these findings to the pharmacy regulator, the General Pharmaceutical Council (GPhC), it confirmed it is following up with the pharmacies involved.
The GPhC publishes guidance “specifically for the safe and effective provision of pharmacy services at a distance which we expect online pharmacies to follow”.
“We are issuing an updated version of our guidance shortly, which will set out additional safeguards around medicines used for weight management,” it added.
Novo Nordisk, the company behind Ozempic, Wegovy and Saxenda, made it clear it does not “promote, suggest or encourage the use of any of our medications outside of their approved labels”.
It can be so overwhelming, for anyone, but particularly young women, growing up in the age of Ozempic and TikTok. But there is so much more to life than what you weigh.
“The number on the scale is not going to change how you feel on the inside,” Meranda said as we wrapped up our chat.
Dr Price echoed her view and added that, if abused, weight-loss drugs can create more problems than they solve.
“There is a lot of social pressure to look a certain way but your health is worth so much more,” she said.
If you’re struggling, someone you love is struggling or just needs some support, the NHS recommends Beat, a charity focused on eating disorders. which has many resources that can help.
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