Findings by investment bank UBS could prompt the government to question the fairness of supermarket pricing, which could lead to a competition inquiry.
The UBS report said: “UK food prices are rising more rapidly than most other OECD economies’ food prices, and have significantly outstripped food retailers’ cost inflation. This could allow UK politicians to suggest that food price inflation is ‘unfair’ or ‘excessive’.”
UK food inflation hit an annual rate of 4.6% in February, its highest level for 18 months and significantly above the eurozone average of 1.5%.
Labour MP Chua Umunna, a member of the Treasury select committee, said: “These figures would suggest that the dominance of our supermarket sector by essentially five big players may be distorting the market, and this definitely merits investigation.”
But the British Retail Consortium said the statistics did not take into account the high level of promotional activity in UK supermarkets.
BRC director general, Stephen Robertson, said: “Thirty eight per cent of groceries are now on promotion. No-one goes shopping and ignores all of the special offers. It isn’t an accurate reflection of real life.”