By Oscar Williams-Grut

REUTERS/Neil Hall

A shopper pushes a trolley in a supermarket in London, Britain April 11, 2017.

LONDON — Asda remains Britain’s cheapest supermarket while Tesco is doing the most to stave off any Brexit-fuelled price rises, according to new research from UBS.

The investment bank on Wednesday published a monitor of prices at Britain’s major supermarkets in March. UBS concocts an imaginary typical shopping basket, which includes everything from meat, fish, and veg to booze and pet food, and then tracks price changes over time.

Prices have been rising across Britain since last year’s vote to leave the European Union. The Brexit vote sent the pound crashing against the euro and the dollar, meaning food and other goods imported from abroad became more expensive. Inflation stood at 2.3% in March, with food and drink the biggest contributor to price rises.

Across the industry, UBS’ “average basket” cost 2.4% more in March than it did a year earlier. Food production prices have risen by 2.8%, suggesting supermarkets are passing on the bulk of cost rises to consumers.

But this is not the case across the board. Tesco’s prices rose by 1.6% in March compared to a year earlier, the lowest inflation in the sector. Looking at a 3-month average of price rises, Tesco also has the lowest inflation — 0.85%.

ubs

UBS Evidence Lab

Tesco has been notable in fighting price rises from suppliers driven by Brexit. The suppliers want supermarkets to put prices up so their profit margins are protected. But Tesco has fought back, aiming to keep shoppers happy by keeping inflation as low as possible. The supermarket memorably had a bust up with Unilever over the price of Marmite and stopped stocking Heineken drinks in a similar row.

While Tesco is fighting, UBS found prices rocketing at Sainsbury’s, Morrisons, and Ocado. Prices rose over 3% at each in March compared to a year earlier. Waitrose is not far behind, with prices up 2.6% last month.

sainsburys

UBS Evidence Lab

Price inflation is rapidly accelerating at Sainsbury’s.

UBS’ Daniel Ekstein says in Wednesday’s note: “Morrisons’ shoppers are seeing some of the highest inflation, a concern given its position as a value led brand.”

Price rises are important but do not tell the whole story.

Prices could be rising fast at a cheap retailer but that could be because it is coming from a lower base. Put another way, a big shop at Morrisons is likely still cheaper than one at Waitrose, even though prices are rising faster at Morrisons.

UBS also analyses the price competitiveness of each supermarket compared to each other. UBS says: “Each store’s
monthly price index is compared to a market-weighted average index for the month (weighted according to the relative market share of each of the six stores in our analysis set) to identify which stores are priced above and which stores are priced below the market average.”

The investment bank found Asda is the cheapest supermarket for grocery shopping, with the price of UBS’ basket 6.7% cheaper than the market average. Waitrose is the most expensive, with shoppers paying 10.2% more