Ocado and Sainsbury’s unveil new raft of price cuts

Big supermarkets have cut more prices, as new research highlights damage rising costs is doing to our mental health.

With rising food prices remaining a big topic for cash-strapped households across the country, it’s notable that two big names have made price cuts this week.

Ocado announced it was cutting the price of more than 100 everyday food items.

They aren’t tiny cuts either, with prices being reduced across the own-brand, branded and M&S ranges by up to 25%.

Ocado isn’t exactly renowned as being a budget option if you’re looking to save a few quid on your groceries, yet the online supermarket reckons that it is now the cheapest around on milk, with four pints setting you back £1.45.

Around 60 of the reductions to Ocado products were down to price cuts introduced by M&S last week, with M&S supplying much of the food on offer from the online grocer.

Ocado isn’t the only supermarket to reduce prices, either.

Sainsbury’s has also said it will be spending £15 million in cutting the cost of a host of cupboard staples like pasta and rice, as well as including its chicken breasts in its Aldi price match scheme.

Matching prices

The Ocado price cuts run alongside Ocado’s price promise, where it matches what Tesco charges on around 10,000 like-for-like products.

A host of supermarkets have such measures in place. Both Tesco and Sainsbury’s for example have schemes where prices for all sorts of products are matched with what you would pay at Aldi. 

Asda has a slightly different model, in that rather than matching prices with another supermarket it instead lines up its household products with what is charged at Home Bargains.

It’s a good selling point for supermarkets, to convince customers that they can save cash on their shopping by sticking with that retailer, rather than moving to a more budget-friendly rival.

However, according to industry bible The Grocer, the schemes are being investigated by the Competition and Markets Authority (CMA) as part of its study into supermarkets, with fears that they could be used to profiteer off customers during the cost of living crisis.

The thinking is that if everyone is doing something similar then there is less incentive to actually cut prices meaningfully, since the supermarkets know that everyone else will match it.

Slowing food price inflation

It’s no secret that food price inflation has been racing along at an extraordinary rate. Data from the ONS shows that the cost of our grocery shopping is up at around the highest levels seen in 45 years.

Thankfully, the rate does seem to be slowing though.

Figures from Kantar World Panel show that like-for-like grocery price inflation fell to 16.5% in the four weeks to 11 June. That’s still awfully high ‒ in fact it’s the sixth-highest reading seen in the past 15 years ‒ but it is the lowest level seen this year.

However, such a rate of increase is clearly unsustainable. 

Changing habits

As a result, it’s not hugely surprising that shoppers are changing how they go about purchasing food in order to cope.

The Kantar study found that many shoppers are focusing on purchasing their supermarket’s own label lines ‒ sales of value ranges are up by 41% on the same period of last year.

We have also seen the big supermarkets suffer from shrinking market share, with the deep discounters of Aldi and Lidl the benefactors.

The impact on our mental health

It’s worth remembering that the way prices have grown has not just damaged our financial health but our mental health as well.

Take the Kantar research which found that nearly 70% of households are either ‘extremely’ or ‘very worried’ about food and drink inflation.

That’s up from a little over two-thirds back in January.

According to its research, food prices remain the second biggest concern for households, just behind energy bills.

It was echoed by a separate study from Which?, where one in four said that rising food prices had dented their mental health.

This rose to 30% of women, while a third of those aged 35 to 54 said food price increases were harming their mental health. 

One in five said that the worries over food were impacting their sleep, with a similar number saying their physical health had deteriorated too.

While it’s welcome that food price inflation is slowing, the fact remains that prices are still going up, albeit a little slower.

Given the damage the hikes we’ve seen already do to our physical and mental health, it is likely that there’s more pain to come.