Supermarkets 'abusing position'

Coffee and tea prices rose 10.2% in the UK and 1% in the eurozone area

The UK's supermarkets may be exploiting their "monopoly position" to increase prices, a study claims.

Two Royal Bank of Scotland economists compared recent food price rises in the UK with those seen on the continent.

Coffee and tea prices, for example, rose 10.2% in the UK in the year to 31 March, but only increased by 1% in the eurozone area, they found.

The British Retail Consortium, which represents the supermarkets, rejected the survey's findings.

'Fierce competition'

Overall, the price of food and non-alcoholic drinks rose 5.6% in the UK over the past year, compared with 1.9% in the eurozone area, found the report.

Vegetable prices increased 10.2% compared with only 3.1% on the continent.

The report concluded that while some of the price rises in the UK could be attributed to higher energy costs, this would not be enough to account for the size of the difference between here and the eurozone area.

"It may be that the supermarkets are increasingly able to exploit their monopoly position and raise prices even when consumer spending is not especially robust," said the report.

The British Retail Consortium (BRC), which represents supermarkets, denied the notion that they wield monopoly power.

"There is fierce competition between supermarkets, which has been borne out the reports so far from the Competition Commission's investigation," said the BRC's Richard Dodd.

"A typical trolley load is currently 7% cheaper than it was in 2000," he added.