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Monday, 20 March, 2000, 12:17 GMT
The consumer's charge sheet
shopping basket
Are we being overcharged for the basics?
The last few months have seen the consumer's cause taken up with gusto by the government, but are the British really being ripped off?

Rip off Britain
Inquiries have been launched into everything from hotel phone charges to soft drink prices in pubs.

But the main spotlight has fallen on the services few people can avoid in daily life - supermarkets and banks.

Excessive profits

The Competition Commission last year launched an investigation into prices at the country's main food retailers - Tesco, Asda, Sainsbury's, Safeway and Morrisons.

The initial findings of the report said there was only limited evidence of excessive profits.

We need to recognise that many people feel they are living in a rip-off Britain

Trade Secretary Stephen Byers (July 1999)
The survey, carried out by market researchers AC Nielsen, found that UK consumers paid more than shoppers in the US, France and Germany for just eight out of 56 items that were analysed.

However, the commission said supermarkets may be operating monopolies involving price controls and it wants to focus on the companies' relationships with their suppliers.

Supermarkets immediately called for the government to abandon the inquiry, saying the findings proved they were not ripping off customers.

Prices falling

There is little doubt that British food and clothes prices have fallen in the past year - statistics show average food prices have been falling since last August and are now 2% lower than last year.

But the government and consumer groups say this is a result of pressure having been put on the industry.

Secretary of State for Trade and Industry Stephen Byers said: "Pressure from consumers, the media and government led to prices falling, for example, shoppers have benefited from 500m of savings from high street price wars."

But government critics accuse Mr Byers of jumping on the consumer bandwagon.

Shadow trade and industry secretary Angela Browning said Labour ministers had leapt on the 'rip-off Britain' bandwagon because it was a "convenient soundbite".

"It now seems that they have made a grave miscalculation," she said.

Up in arms

Food retailers have also seen competition become more fierce since the arrival last summer of US retail giant Wal Mart which took over Asda.

The picture becomes even more confusing when you realise that comparisons with prices in other countries are skewed somewhat by the high level of the pound which makes goods look comparatively more expensive in the UK.

More expensive in the UK
Dog food
Ground coffee
Toilet tissue
For their part, supermarkets have reacted furiously to rip-off accusations.

They say crude comparisons between prices in the UK and abroad are "meaningless".

The British Retail Consortium says consumers cannot expect to pay the same for goods as shoppers in Europe and the US when there are large differences in property costs, wage levels, fuel and taxation.

These claims are reflected in a survey conducted by retail consultants Management Horizons for the British Brands Group which found that while UK customers may pay more for CDs, computer games and clothes than in the US, retailers have higher costs.

"Words such as 'rip-off' Britain suggest that someone along the line is profiteering and that is certainly not the suggestion of this report," John Noble, director of the British Brands Group said.

The supermarkets have also recently blamed manufacturers for price differentials. Asda says popular brands are sold at lower wholesale prices to shops on the continent.

With the final report yet to be published, the debate is bound to carry on. But so far supermarkets, unlike the banks, appear to be winning the argument.

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See also:

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Cash machine charges slammed
12 Feb 00 | Business
UK shoppers 'not ripped off'
22 Sep 99 | Your Money
No evidence of consumer rip-off
14 Oct 99 | Your Money
New standards for mortgage lenders
15 Dec 99 | Business
Lenders face fresh grilling
15 Oct 99 | Business
Do we live in rip-off Britain?
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