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.
Two senior Labour MPs have suggested the prime minister may have to go within months if the government continues to perform poorly.
Sky News’ deputy political editor Sam Coates said his sources – a member of the government and a prominent politician – have “put Sir Keir Starmer on notice”.
Both warned that, if Labour performs badly in next May’s elections across Wales, Scotland and London, it could mark the end of his time in Downing Street.
Coates added: “The level of unhappiness and despair in parts of the Labour Party is so striking that right now, on the first anniversary, I am hearing from ministers in government that Starmer might have to go in months.”
Reform UK is surging in the polls in Wales, while Labour faces a threat from left-wing parties such as the Greens in London.
It comes as the prime minister made it clear that Rachel Reeves has his “complete support” as chancellor and remains integral to his project, Sky News’s political editor Beth Rigby understands.
She looked visibly upset during Prime Minister’s Questions, with a spokesperson claiming she had been affected by a “personal matter”.
A day earlier, Sir Keir’s controversial welfare bill was passed despite a sizeable rebellion from Labour MPs, with major U-turns meaning a new £5bn black hole has appeared in the country’s finances.
One senior figure told Rigby that the pair were as “as close politically” as any chancellor and prime minister have ever been.
“She is going absolutely nowhere,” they added.
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Welfare vote ‘a blow to the prime minister’
Ms Reeves’s tears sent markets spiralling, with the value of the pound and long-term government bonds falling sharply.
Later in the day Sir Keir, said Ms Reeves will be chancellor for a “very long time to come”.
The prime minister said it was “absolutely wrong” to suggest her tearful appearance in the Commons related to the welfare U-turn.
“It’s got nothing to do with politics, nothing to do with what’s happened this week. It was a personal matter for her,” he said while speaking to the BBC’s podcast Political Thinking with Nick Robinson.
“I’m not going to intrude on her privacy by talking to you about that. It is a personal matter.”
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Asked if she will remain in post, he said: “She will be chancellor by the time this is broadcast, she will be chancellor for a very long time to come, because this project that we’ve been working on to change the Labour party, to win the election, change the country, that is a project which the chancellor and I’ve been working on together.”
He said Ms Reeves has done a “fantastic job” and added: “She and I work together, we think together. In the past, there have been examples – I won’t give any specific – of chancellors and prime ministers who weren’t in lockstep. We’re in lockstep.”
Wes Streeting, the health secretary, also offered a strong defence for the prime minister and chancellor.
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Health Secretary: Reeves is ‘resilient’
He told Sky News this morning that Sir Keir has been “consistently underestimated” and was “of course” safe as prime minister.
And he said Ms Reeves was a “tough character” who was ” resilient” and “here to stay”.
Despite making “significant improvements”, Greater Manchester Police (GMP) has lost the “trust and confidence” of some victims of grooming gangs, according to a report by the police watchdog.
Michelle Skeer, His Majesty’s Inspector of Constabulary, said that since 2019, when GMP started to review its non-recent child sexual exploitation investigations, “the force has improved its understanding and approach to investigating allegations of child criminal and sexual exploitation”.
The document, published today, said police have live investigations into “multi-victim, multi-offender” child sexual exploitation inquiries, involving 714 victims and survivors, and 1,099 suspects.
Grooming gangs scandal timeline
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‘Our chance for justice’
But despite recording improvements, a report by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) also identified:
• Various training gaps within the investigation team
• Lack of consistency in evaluating case files between social care, health and police
• Failures to initially support victims meant they had “lost trust and confidence” in police
The report was commissioned by the Mayor of Greater Manchester Andy Burnham in 2024 to evaluate whether police, councils and health services can protect children from sexual exploitation in the future.
Its release comes days after Sir Keir Starmer announced he was launching a new national inquiry into grooming gangs after previously arguing one was not necessary,
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Starmer to launch new grooming gang inquiry
The findings were issued as the final part of the CSE (child sexual exploitation) Assurance Review process which started in 2017. The first three reports examined non-recent child sexual exploitation in Manchester, Oldham and Rochdale.
Mr Skeer said that the force has been trying to improve its service to those who have experienced sexual exploitation, but previous failings have badly affected trust in GMP.
He said: “For some, trust and confidence in the police had been lost, and the force would not be able to rectify their experiences.
“It is vital that improvements are led by victims’ experiences, and if they do come forward, they are supported, protected and taken seriously.”
A recent report by Baroness Casey found a significant over-representation of Asian men who are suspects in grooming gangs in Greater Manchester, adding though authorities are in “denial” more needs to be done to understand why this is the case.
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Teen caught in child sex exploitation
Inspectors also said there were “training gaps” in some investigation teams and issues with data sharing, with local councils sometimes not willing to provide detectives with information, leading to “significant delays in investigations” into grooming gangs.
It cites problems with intelligence provided by Manchester City Council, which took months to arrive and “was so heavily redacted that some pages contained only a few words”, the report said.
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GMP is the only force in the country to set up a dedicated team to investigate grooming gangs. Called the Child Sexual Exploitation Major Investigation Team (CSE MIT) it has about 100 staff and a ringfenced budget.
In October 2024, the force told inspectors there were 59 live multi-victim, multi-offender child sexual exploitation investigations, of which 13 were being managed by the CSE MIT.
The report adds: “The force fully accepts that it made mistakes in the past.
“It has taken positive and effective steps to learn from these mistakes and improve how it investigates recent and non-recent child sexual exploitation.”
Separately, the Baird Inquiry published in July 2024 found officers at GMP were abusing their power – making unlawful arrests, unlawful and demeaning strip searches, sometimes treating victims as perpetrators, and traumatising those who have suffered sexual abuse or domestic violence.
The health secretary has offered a strong defence of the prime minister and chancellor – ahead of Sir Keir Starmer setting out his 10-year vision for the NHS.
PM ‘might have to go in months’ – politics latest
Wes Streeting dismissed suggestions the prime minister could be forced out in months following the toughest week of his premiership yet, and described Rachel Reeves as “resilient” and would “bounce back” following her tearful appearance in the Commons on Wednesday.
Overnight, two senior sources – a member of the government and a prominent politician – told Sky News’ deputy political editor Sam Coates that they had “put Sir Keir Starmer on notice”.
The health secretary, who was speaking as Sir Keir prepares to set out his 10-year vision for the NHS, said the prime minister had been “consistently underestimated”.
Asked by Kamali Melbourne on Sky News Breakfast whether Sir Keir was “safe”, Mr Streeting said: “Of course.
“Keir Starmer has been consistently underestimated. I wonder when people will learn.
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Reeves has ‘complete support’
“They said he couldn’t win the Labour leadership, but he did. They said he couldn’t change the Labour Party, but he did.
“They said he couldn’t take the Labour Party from its worst defeat since the 1930s to election victory last year. And he did and now the cynics say he can’t change the country, but he will.”
As for Ms Reeves – whose tearful appearance in the Commons spooked markets after the prime minister initially failed to back her, Mr Streeting said the chancellor was a “tough character” who was “resilient and she will bounce back”.
The health secretary declined to expand on why Ms Reeves was in the chamber at all yesterday, repeating that it was a personal matter.
“Rachel Reeves as chancellor is here to stay,” he continued.
“We need her to get the economy from strength to strength, to make sure that family finances are in better health than we were when we came into office.”
Speculation about the futures of the two most senior members of the government threaten to overshadow the announcement today, which the government says is “one of the most seismic shifts” in the health service’s history.
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Why has Starmer axed NHS England?
Sir Keir will pledge three main facets of the plan: moving care into the community, digitising the NHS, and a focus on sickness prevention.
The prime minister will announce neighbourhood health services will be rolled out across England to improve access to the NHS and to shift care out of overstrained hospitals.
Sir Keir has already promised thousands more GPs will be trained, and to end the 8am “scramble” for an appointment.
He also previously said his government will bring the NHS into the digital age, with “groundbreaking” new tools to support GPs rolled out over the next two years – including AI to take notes, draft letters and enter data.
And he will promise new contracts that will encourage and allow GP practices to cover a wider geographical area, so small practices will get more support.
Unite, one of the UK’s largest healthcare unions, welcomed the plan cautiously but said staff need to be the focus to ensure people are better looked after.
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‘Reform or die’
Sir Keir said: “The NHS should be there for everyone, whenever they need it.
“But we inherited a health system in crisis, addicted to a sticking plaster approach, and unable to face up to the challenges we face now, let alone in the future.
“That ends now. Because it’s reform or die.”
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Neighbourhood health services
The newly announced neighbourhood health services will provide “pioneering teams” in local communities, so patients can more conveniently access a full range of healthcare services close to home.
Local areas will be encouraged to trial innovative schemes like community outreach door-to-door to detect early signs of illness and reduce pressure on GPs and A&E.
The aim is to eventually have new health centres open 12 hours a day, six days a week to offer GP services as well as diagnostics, post-operative care and rehab.
They will also offer services like debt advice, employment support, stop smoking help or weight management.
More NHS dentists
Dentists will also be part of the plan, with dental care professionals part of the neighbourhood teams.
Dental “therapists” will carry out check-ups, treatments and referrals, while dental nurses could give education and advice to parents or work with schools and community groups.
Newly qualified dentists will be required to practice in the NHS for a minimum period, which they have said will be three years.
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