Supermarket prices soaring three times faster than EU

The cost of groceries is rising nearly three times as fast in Britain as the rest of Europe, according to research.

Consumers pay 5.6 per cent more to fill their trolley than they did a year ago. That compares with an increase of only 1.9 per cent in the Eurozone.

The research by the Royal Bank of Scotland undercuts claims from supermarket chains such as Tesco and Asda that their vast market share does not damage customers' interests.

Tesco controls 31.2 per cent of the British grocery market, while Asda has 16.9 per cent.

The report's authors, economists Geoffrey Dicks and Ross Walker, said rising energy prices are thought to have pushed up the cost of a broad range of products, including food.

Poor harvests have also contributed in recent months.

But they struggled to explain why prices here should be rising at a significantly faster pace than elsewhere in Europe. They claim their investigations point to a "sinister explanation".

"Over the years, as the supermarket giants have built up their market share, they have come to dominate food sales," they wrote.

"At the same time they have progressively extended their reach into non-food...it may be that they are increasingly able to exploit their monopoly position and raise prices, even when consumer spending is not especially robust."

The report - The Return of Rip-Off Britain? -found tea and coffee prices soared 10.2 per cent over 12 months, compared with only 1 per cent on the Continent.

Vegetable prices also jumped 10.2 per cent, whereas they rose 3.1 per cent across the Channel.

Non-alcoholic drinks went up 6 per cent, compared with 2 per cent in the rest of Europe.

Critics have urged the Competition Commission, which is investigating the industry, to take on board the latest findings.

They warned that the power of Tesco is such that Britain is in danger of turning into a "one-supermarket state".

Matt Hardman, of the Forum of Private Business, said: "The supermarkets have been able to convince consumers that shopping with them is cheaper than anywhere else, but in reality if you do your homework you can get a better deal elsewhere.

"We are concerned by their power to inflate prices, drive their competitors out of business and grab market share."

A Competition Commission spokesman said it would look closely at the research.

Tesco hit back, insisting it offered shoppers a good deal. It said prices of some fresh products have been rising because of forces beyond the company's control.

Spokesman Jonathan Church said: "The price war isn't over in the UK. We still compete fairly on price and we continue to invest in cutting prices.

"It would be wrong to suggest any price rises are due to monopolistic pressures.

"Some prices have gone up on some fresh food but to suggest it is due to some practices between the supermarkets is nonsense."