The cheapest supermarket for bread, sugar, chocolates & cereals!

by Donna Ferguson on 02 August 2011  |  49 comments
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Food prices are rising dramatically. But which supermarkets are passing on the hikes the most?

Have you noticed prices have gone up at the supermarket? You’d have had to be blind not to. But which supermarket has put prices up the most across different food categories?

After lovemoney.com was granted exclusive access to mysupermarket.com’s database of prices, we decided to find out. 

Bread

Wheat prices have risen by 98% over the past year after a blisteringly hot summer in 2010 devastated wheat and cereals crops in Russia and Eastern Europe and the driest spring in 100 years lowered crop yields from France and Germany.

This means the price of a loaf of bread has increased dramatically around the world. In Zambia, for instance, the cost of a loaf jumped by 75% in just eight months. Ouch!

The good news is, unlike in Zambia, 90% of the costs incurred by supermarkets in selling a loaf of bread in the UK are packaging and distribution costs, so the price of a loaf hasn’t risen here quite so dramatically.  

However, it still pays to know where to shop. Check out this table:

As you can see, Morrisons has increased its bread prices by a whopping 22% over the past year, while at Ocado (the online shop for Waitrose), prices have risen by only 2%.

However, this doesn’t tell the whole story because Morrisons still sells the cheapest loaves of bread, on average, charging just £1.01 per loaf. Ocado, meanwhile, charges £1.41!

Breakfast cereals

Low wheat and cereal crop yields also pushed up the cost of breakfast cereals, with prices increasing across the supermarkets by 12% on average over the past year.

But which supermarket has put up prices the most?

Morrisons has put up its prices the most with a 32% increase in the average price of its cereal, which is a shame as it was the cheapest back in 2010 by a long way. Now, its prices are more in line with Tesco and Sainsbury’s.

Interestingly, despite the fact that Asda has put up its prices by 13%, its cereals are the cheapest in the table on average. Meanwhile, Ocado - which only increased prices by 4% - remains the most expensive, charging £2.57 on average per cereal.

Chocolate

Cocoa prices have more than doubled in the past five years and now stand at £2,000 a tonne - that’s 80% more than last year. Why? Firstly, last year, a hedge fund decided to corner the market and bought 240,000 tonnes of cocoa. That’s almost 7% of the annual global production - enough to send the price steaming straight into the Milky Way. There’s also been fighting in the Ivory Coast in West Africa, where 40% of the world’s cocoa is produced, and there is a lot of concern in the markets about whether cocoa production can keep pace with demand from India and China.

Here’s how the supermarkets reflected the cost of cocoa in their chocolate bags, bars and multipacks over the past year:

Again, Morrisons is leading the way when it comes to price hikes, while Tesco and Asda offer the cheapest chocolate bags, bars and multipacks.

Sadly, Ocado and Waitrose are the most expensive places to shop if you’re a chocoholic, even though they both hardly passed on any increase at all.

Sugar

The price of sugar has risen by 48% in the past year - peaking at a 30-year high. Again, increased demand from China is to blame, along with bad harvests in Australia and Brazil. As with cocoa, commodity dealers have been speculating that prices will rise which - you’ve guessed it - increases demand and encourages price rises! Rising sugar prices are also linked to rising energy prices, because ethanol can be derived from sugar to make vehicle fuel.

How did the supermarkets pass on these hikes?

Yet again, it’s Morrisons at the top of the table - the supermarket giant has increased its sugar prices by a huge 26% over the past year. By contrast, its closest rival, Asda, kept prices stable, declining to pass on any increase at all. This means Asda now offers the cheapest sugars and sweeteners on average, while last year it was Morrisons. 

Large price rises at Tesco, meanwhile, means this supermarket is now more expensive for sugars and sweeteners than Waitrose.

Which supermarket is the cheapest?

Here’s how much you’d pay in total in each supermarket, on average, if you bought all four food items:

If you suspected that shopping at Morrisons had got increasingly more expensive over the past year, and that shopping at Asda is now actually cheaper, then this table suggests you are spot on.

Of course, this only examines four random food categories and should not be taken as conclusive across all the items you’d normally put in your trolley.

Still, a 53% increase in the cost of a trolley  is significant and cannot be ignored - especially when other supermarkets such as Ocado and Waitrose increased prices by as little as 3% and 4%. Of course, their trolleys were the most expensive to begin with - and have remained that way.

So should you ditch Morrisons for Asda?

Maybe. But I think overall, the mysupermarket data shows there is little consistency among the supermarkets and the way that they pass on commodity price hikes.

Personally, I think the best conclusion a savvy shopper can draw from all of this is that you should shop at the cheapest supermarket for your particular trolley and not to stay loyal to any particular store. You can find out which supermarket is cheapest for your trolley each week easily using mysupermarket.com yourself or, if you prefer, simply do one shop at each supermarket for the same staple items you buy regularly and compare receipts.

Finally, don’t forget to consider Lidl and Aldi. We don’t have information for these supermarkets but they are often praised by lovemoney.com readers. So next time you’re passing one, go inside - and let us know how you get on!

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