Cost-of-living crisis: Sainsbury’s cuts prices on essentials as Jeremy Hunt promises interest rate 'solution'

The UK’s second largest supermarket chain will roll out the reductions on the own-brand items from today, also lowering prices on staples including corn flakes, jams and runny honey.

The company added that all Sainsbury’s “happier and healthier” whole chicken breast fillets will be price-matched to Aldi for the first time.

It pledged to continue cutting prices on essential products throughout the summer.

The move comes as supermarkets are under increasing pressure to hand down savings they are seeing on wholesale items to consumers, who have faced punishing food price inflation in recent months.

A study by consumer group Which? published today found soaring food prices are having a detrimental impact on the mental health of shoppers and families.

The increased price of everyday groceries is said to have worsened the mental health of a quarter (25 per cent) of people, the survey suggests.

The Bank of England suggested last week that some retailers are jacking up prices or failing to pass on lower costs to consumers as a way of increasing their profit margins at a time of stubborn inflation.

Chancellor Jeremy Hunt is to meet the Competition and Markets Authority (CMA) and the watchdogs for the energy, water and communications sectors tomorrow to ask whether there is a profiteering problem in their sectors and what they are doing about it.

Ministers are also talking to the food industry about “potential measures to ease the pressure on consumers”, Mr Hunt has confirmed.

Prime Minister Rishi Sunak’s official spokesman told reporters yesterday that the meeting tomorrow will see them discuss “what actions the regulators are taking, what more we could do working together, are there any potential barriers to them going further”.

The official conceded there is “no legal requirement” for supermarkets to pass on savings, but added: “There are rules around things like profiteering – I’m not suggesting that’s the case here.

“Equally, I think we would, of course, want supermarkets and others to rightly pass on the savings they are making with the fall in global energy costs.

“I think that’s what the public would expect and they will vote with their feet if that’s not the case.”

Official figures last week showed that food inflation slowed from 19.1 per cent in April to 18.4 per cent in May after hitting a 45-year high in March.

Tesco chief executive Ken Murphy recently said food inflation has passed its peak, but consumers are still seeing painful rises in their weekly shop.Meanwhile in the Commons yesterday, Mr Hunt has said he was “working on a solution” to make sure banks act more quickly to pass on interest rate rises to savers.

Mr Hunt said he told bank bosses in “no uncertain terms” that there is an issue after acknowledging it is currently “taking too long” for them to pass on the changes to savers.

His remarks came as MPs pressed the Government to take further action after lenders representing over 75 per cent of the market agreed to a “mortgage charter”, providing support for residential mortgage customers.

Labour former Treasury minister Dame Angela Eagle said: “Doesn’t he worry that the banks are being very slow to pass on interest rate rises to those who are saving whilst they are passing almost immediately interest rate rises on to those who borrow, which makes the interest rate mechanism much less effective in dealing with the inflation situation?”

She added: “And did he notice, like I did, that the banks this quarter made over £4 billion extra on the differential between these?

“So shouldn’t he be much tougher on the banks and what is he going to do to stop this profiteering?”

Mr Hunt replied: “[Dame Angela] is absolutely right, it is taking too long for the increases in interest rates to be passed on to savers, particularly with instant access accounts – the rates are more frequently being passed on to people who have fixed-term, fixed-notice accounts.

“But she’s right, there is an issue there. I raised that issue in no uncertain terms with the banks when I met them and I’m working on a solution because I think it is an issue that needs resolving.”

Conservative MP Mark Pritchard welcomed the “mortgage charter” but said: “Constituents are suffering. They are very concerned. Many are having to choose between food, clothes, shoes and paying the mortgage or paying the rent, and decisions we make here – either as a governing party or cross-party – are having a direct impact on individuals’ lives every single day.

“So can I join cross-party with [Dame Angela] and say she is absolutely right that so often when the base rate rises, lenders are very quick to raise interest rates on our constituents, and when they fall – and they surely will fall and hopefully very soon, possibly in the autumn, we’ll see. Can [Mr Hunt] make sure that those reductions are passed on as quickly as possible to our constituents?”

Mr Hunt defended the Government’s record on supporting people, adding: “One thing that can definitely happen better than it is now is passing on increases in the base rates to savers.”

The Bank of England last week hiked the base rate from 4.5 per cent to 5 per cent.