Supermarkets are being investigated over rocket and feather pricing

By Ernie

The Competitions and Markets Authority (CMA) is leading these investigations and is due to release a Road Fuel Market Study on 7th July which will include analysis of fuel price changes and whether companies are passing on lower prices to consumers.

Rocket and feather pricing is a situation that involves prices rising rapidly (like a rocket taking off) and then taking a long time to go back down (like a falling feather). An example of this is last year with fuel prices. Consumers were faced with fast-rising fuel prices caused by supply-side shocks including the Russian invasion of Ukraine. Once wholesale fuel prices began to decrease, the prices at the pump remained high. Rocket and feather pricing may be driven by extreme volatility of prices and supply with diesel being more significantly affected by the price changes. The CMA even found evidence suggesting that prices are likely to be higher at petrol stations where there are few or no competitors nearby showing that companies may be taking advantage of consumers’ need for fuel and not passing on lower prices to them. What’s happening with supermarkets?

The CMA said it would look at whether a failure in competition meant customers were overpaying for food and fuel which have recently experienced a fall in wholesale prices, but consumers are still severely affected, with food and non-alcoholic beverages inflation in the year to May 2023 being at 18.4%.

Asda said it will work in full cooperation with the CMA and is focused on providing the best value at the pumps. This comes after Asda announced it will buy 350 petrol stations. The supermarket industry is dominated by only a few large players (an oligopoly) meaning a lack of competition amongst these giants may be the real driver for rocket and feather pricing.

Despite potential downsides for consumers, the Chief executive of the British Retail Consortium has said there’s a 3-to-9-month time lag for consumers to see falling prices in-store. In addition, supermarkets such as Tesco, Sainsbury’s, and Asda, have been helping consumers in other ways such as through price lock schemes involving thousands of products. Sainsbury’s has said it would invest £15 million to cut the price of its own brand items such as rice and pasta. This shows that there is also good news despite concerns of ‘rocket and feather pricing’.