Stores are being hit with above-inflation price increases on their top-selling price-marked packs (PMPs), analysis by Better Retailing has revealed.
While PMPs are promoted by suppliers as a way to reassure shoppers of value for money in local shops, many recent major increases were often significantly higher than the rate of overall (3.2%, ONS) and grocery (2.3%, Kantar) inflation.
One of the most important examples is the bestselling line in many independent shops – Coca-Cola 330ml PMP, which crossed the £1 barrier for the first time recently, with a new £1.05 PMP.
Similarly, Coca-Cola Europacific Partners’ (CCEP) Monster Energy PMP recently increased from £1.65 to £1.75, 50% higher than the rate of inflation.
The products with the largest increases above inflation belonged to Mondelez.
Cadbury Dairy Milk 95g recently shot up from £1.35 to £1.50, its second rise this year.
This represents an increase 235% greater than the rate of inflation.
For Cadbury Top Deck 95g PMP, the recent increase to £1.50 was more than 10 times higher than the rate of inflation.
Price rises on Mondelez International’s Oreos PMP (291% above inflation) and Cadbury’s Drinking Chocolate PMP (591% above) have also occurred recently.
It’s not just confectionery and soft drinks. The trend was also visible on Coors 330ml 4pk PMP, which rose from £4.99 to £5.25, which is 38% higher than inflation.
WKD Blue 70cl PMP was the only line analysed to see a price cut, down from £3.79 to £3.29.
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An industry expert said while these increases “go largely unnoticed” by stores, the impact on shopper perceptions can be “quite shocking”.
The figures were based on data from In-Touch Group on eight recent PMP increases.
Better Retailing calculated the consumer price index (CPI) inflation between the latest increase and the previous increase and compared it with the actual PMP increases to generate the figures.
CPI is a general measure and inflation on individual commodities, such as cocoa, which has risen by 114% in the past 12 months, may be significantly different.
CCEP said PMPs accounted for “more than 69%” of all soft drinks sales in convenience stores.
Responding to Better Retailing’s analysis, a spokesperson for CCEP said: “The industry has faced increased costs across key commodities for some time now due to external factors beyond its control.
“As a business, we have taken steps to mitigate the impact of these cost pressures where possible.
“This includes ongoing efforts to maintain a fair margin on PMPs and ensuring retail customers can continue to make the most of the opportunities they can bring.”
Asked about its increases, a Mondelez International spokesperson responded: “We understand the economic pressures that consumers continue to face, and raising prices is a last resort for our business.
“However, as a food producer, we are continuing to experience significantly higher input costs across our supply chain, with ingredients such as cocoa and sugar, which are widely used in our products, costing far more than they have done previously.
“Meanwhile, costs such as energy, packaging and transport remain high. This means our products continue to be much more expensive to make and while we have absorbed these costs where possible, we still face considerable challenges.
“As a result, we are having to make some carefully considered price increases across our range so that we can continue to provide consumers with the brands they love, without compromising on the great taste and quality they expect.”
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