Britain's competition watchdog will step up its work looking into grocery prices, but has so far not seen evidence pointing to specific concerns in the sector, it said on Monday, after food price inflation hit a 46-year high in March.
Official data showed UK food prices were 19.1% higher in March than a year earlier, the biggest such rise since August 1977, while in April, grocery inflation was 17.3%, according to industry data.
"Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market," the Competition and Markets Authority said.
It said it would focus its work on areas where people are experiencing the greatest cost of living pressures.
The Bank of England said last week it expected overall inflation - which remained above 10% in March - to fall more slowly than it had hoped, mostly due to unexpectedly big and persistent rises in food prices.
Lawmakers have launched an investigation into the fairness of the country's food supply chain, while on Tuesday Prime Minister Rishi Sunak, who has pledged to halve overall inflation this year, will host a food summit of farmers, suppliers, retailers and industry bodies to discuss the sector's issues.
Earlier this month, France's government pledged to take action against food retailers who fail to pass on lower wholesale prices to consumers.
In Britain, the smaller opposition Liberal Democrats party has called for the government to investigate supermarkets' profits.
Supermarket groups, including market leader Tesco (TSCO.L), deny claims from consumer groups and trade unions that they are profiteering, saying they have taken a hit to earnings and have operating margins of 4% or less, while consumer goods firms such as Unilever (ULVR.L) and Nestle (NESN.S) have margins of 16-17%.
Separately, the CMA said it had found evidence that weakening retail competition was contributing to higher fuel prices for drivers.
It noted that fuel margins have increased across the retail market, but in particular for supermarkets, over the past four years.
The CMA said it was not satisfied that some supermarkets had been sufficiently forthcoming in their responses to its road fuel market study.
"So we will be calling them in for formal interviews to get to the bottom of what is going on," CMA CEO Sarah Cardell said.
