Tesco chief issues warning amid fears companies are using inflation to hide price rises 

Food firms could be using inflation as an excuse to raise prices more than necessary, the Tesco chairman claimed yesterday.

John Allan said it was ‘entirely possible’ food makers were putting up prices to take advantage, as costs of items such as milk and cheese hit their highest levels since 1977.

He added Tesco was trying ‘very hard’ to challenge price increases it believed were needless. ‘We have a team who… work out whether or not these cost increases are legitimate,’ he told the BBC.

Tesco temporarily removed Heinz beans and ketchup from its shelves last summer following a row over pricing

He said Tesco’s buying teams were dealing with the problem ‘every day of the week’ – although he noted that most increases were legitimate.

‘There have been some dramatic increases in commodity costs, energy costs and labour costs,’ Mr Allan said, adding that cheaper own-label alternatives to brands were available at most supermarkets.

Mr Allan’s comments came after the corporate giants behind some of Britain’s favourite foods including Heinz baked beans and Head & Shoulders shampoo were accused of greed and profiteering after hitting shoppers with huge price hikes while raking in massive profits.

For example, the price of a can of Heinz tomato soup had rocketed 73 per cent from 98p this time last year to £1.70, while a jar of Hellmann’s mayonnaise has surged 42 per cent from £1.75 to £2.49.

Tesco temporarily removed Heinz beans and ketchup from its shelves last summer following a row over pricing after the brand’s US owner Kraft Heinz tried to charge the supermarket extra blaming higher manufacturing costs.

Seven of the biggest consumer businesses, which include Cadbury owner Mondelez and Dettol maker Reckitt Benckiser, are predicted to unveil combined profits of £50 billion for 2022 – £2 billion more than the previous year, The Mail on Sunday revealed.

The scale of the price hikes has caused some campaigners, including former pensions minister Ros Altmann, to call for an investigation into the matter by competition regulators.

But the increases are already squeezing household budgets, with food prices having jumped 16.8 per cent in December, according to the Office for National Statistics (ONS).

The surging cost of food has also hampered the fight against UK inflation, which while dipping slightly to 10.5 per cent last month from 10.7 per cent in November still remained at levels not seen for 40 years.