Supermarket bosses denied they were making too much money from the price hike, telling MPs the industry was “the most competitive we’ve ever been”.
Bosses at Tesco, Sainsbury’s, Asda and Morrisons were under fire on Tuesday over high food and fuel prices.
Supermarkets rejected claims of overprofits and said they were shielding customers from the full impact of rising costs.
The competition watchdog monitors whether food and fuel prices are too high.
It is investigating whether a “competitive failure” meant customers were overpaying.
Supermarket bosses were questioned by MPs on the business and commerce committee on Tuesday about why food prices have continued to rise despite a fall in some wholesale spending.
Food prices rose 14.6% in the year to June, according to the British Retail Consortium, which represents supermarkets. That’s down 15.4% in the year to May, but that doesn’t mean prices are falling, just rising at a slower pace.
Chairman Darren Jones said Tesco, Sainsbury’s and Asda had made big profits compared to before the Covid pandemic, but said Morrisons had not.
But the supermarkets said they were doing everything they could to protect customers from higher costs stemming from higher energy, labor and commodity prices.
Jane Hunt, a Conservative MP, asked the executives if they were “actually a cartel” colluding to set prices.
In response, Chris Comerford, Asda’s chief commercial officer, said UK retail was “the most competitive market”, a view echoed by the heads of Sainsbury’s and Tesco.
Politicians, trade unionists and the governor of the Bank of England are questioning why supermarket prices have not fallen as quickly as wholesale prices for ingredients such as wheat.
Some suggest that retailers may be failing to pass on the savings and are instead hoarding the profit.
Supermarkets have previously said they have cut prices where possible, adding that wholesale price cuts take time, usually three to nine months, to hit shelves.
Helen Dickinson, head of the British Retail Consortium, said the trade body expected food inflation to fall “to single digits later this year”.
Most of the big chains have recently introduced significant price cuts on staples, with Sainsbury’s on Monday the latest to announce it is investing £15m to cut costs on staples such as rice, pasta and chicken.
Tesco, Morrisons, M&S, Aldi and Lidl have cut prices on staples such as bread, milk and butter over the past few months.
However, some items such as milk and eggs remain relatively expensive compared to pre-Covid prices.
Jamie Keeble, co-founder of sausage and burger maker Heck, which supplies most major supermarkets, told the BBC’s Today program that the price of pork was expected to remain high for the next 18 months.
He said the only way supermarkets could reduce their prices was by asking suppliers to cut costs, but added: “We are certainly not in a position to start reducing the costs of our products.
“At the end of the day (supermarkets) are going to have to cut their margins if they really want to cut shelf prices, that’s the only way to do it.”
Separately, the four supermarket bosses backed calls for more transparency on fuel prices after MPs highlighted that petrol and diesel prices are lower in Northern Ireland as a result of widespread data sharing with drivers.
A research by academics at the London School of Economics last month found that almost a third of food price inflation since 2019 was due to Brexit.