Branded Food Products Contribute to Inflation Surge
Branded food companies have been contributing to rising inflation by increasing their product prices more than their costs, a practice known as “greedflation,” according to a report by the UK competition regulator. Despite this, the regulator will not take immediate action against most manufacturers as it found that the market remains competitive. The report highlighted that popular brands like Heinz Beanz, Hellmann’s mayonnaise, and Felix cat food have been able to raise prices significantly more than unbranded products.
The Competition and Markets Authority (CMA) noted that consumers loyal to well-known brands have borne the brunt of these price hikes. High-margin items like infant formula, baked beans, pet food, and mayonnaise have seen substantial price increases, while poultry and milk have had lower margins. An example cited in the report showed that in November 2023, a branded tin of baked beans was nearly three times more expensive per 100g than its own-label equivalent and five times more expensive than the entry-level version.
Consumer Behavior and Market Dynamics
The CMA found evidence of consumers “trading down” to more affordable options in most food categories where own-brand alternatives are available. While branded baked beans saw price hikes of over 50% in the past two years, their market share has dropped by over 10 percentage points. However, the regulator expressed ongoing concerns about the infant formula market due to limited competition, as Aldi is the only supermarket offering own-brand infant formula.
The regulator plans to further examine the infant formula market to ensure competitive pricing and effective market dynamics. Additionally, the CMA will investigate the impact of supermarket loyalty schemes on pricing. This scrutiny aims to protect consumers from paying excessively high prices, particularly in essential categories like baby formula.
UK Parliament to Scrutinize Telegraph Sale
A group of 18 MPs, including former Conservative party leader Iain Duncan Smith, has urged the government to investigate the Barclay family’s proposed sale of the Telegraph to a consortium backed by the United Arab Emirates, citing national security concerns. The proposed deal involves RedBird IMI, a joint venture between US company RedBird Capital and Abu Dhabi’s International Media Investments (IMI), repaying the Barclay family’s debts to Lloyds, which seized control of the titles in June.
The MPs argue that the deal poses a “very real potential national security threat” and have written to Deputy Prime Minister Oliver Dowden to request a formal investigation. Culture Secretary Lucy Frazer is expected to decide by Friday whether to launch an inquiry involving Ofcom and the competition regulator on public interest grounds.
Network Rail Under Investigation for Poor Performance
The UK’s rail regulator is set to investigate Network Rail over poor train punctuality and reliability between Wales, Cornwall, and London. The investigation will assess whether Network Rail is meeting its legal obligations in these regions and will examine the effectiveness of the region’s performance improvement plan, asset management, and the impact of network changes on train performance.
Feras Alshaker, ORR’s director of performance and planning, stated that while Network Rail has made progress in other areas, performance in the Wales & Western region has deteriorated, causing issues for passengers and freight. The investigation aims to identify root causes and support Network Rail in implementing effective solutions to improve reliability and punctuality.
Rolls-Royce Faces Opposition Over Price Hikes
British jet engine manufacturer Rolls-Royce plans to raise profits by increasing prices, but it may face resistance from key customers like Emirates Airline. Emirates president Tim Clark emphasized the need for Rolls-Royce to deliver engines that meet customer expectations before raising prices. He urged the company to focus on reliability and performance, suggesting that doing so would justify higher maintenance costs.
Rolls-Royce CEO Tufan Erginbilgiç recently outlined plans to quadruple annual operating profits by cutting costs and raising prices. However, Clark warned against being “over-greedy” and stressed the importance of maintaining high standards to retain customer trust and ensure long-term profitability.
Saudi Arabia Acquires Stake in Heathrow Airport
Saudi Arabia’s Public Investment Fund (PIF) has purchased a 10% stake in London’s Heathrow Airport as part of a £2.4 billion deal by infrastructure group Ferrovial to sell a quarter of the business. The PIF’s investment is part of a broader strategy to diversify its portfolio and strengthen its presence in key global infrastructure assets.
This acquisition underscores Saudi Arabia’s ongoing efforts to expand its international investments and leverage strategic opportunities in major global markets. The deal is expected to enhance Heathrow’s position as a leading global airport and support its long-term growth ambitions.