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Tuesday, March 01, 2011

UBS Shoot Themselves In The Foot

UBS claim that supermarkets have been increasing their prices by 6%-6.5%, despite the fact that commodity price inflation indicates that rises should only be around 3%3%-3.5%.

The Telegraph quotes Paul Donovan, a UBS economist:

"That suggests there may be margin expansion in the supermarket sector… Prices are rising in excess of justifiable cost increases."

However, UBS then go to shoot themselves in the foot by noting that only 20%-25% of the price reflects the "commodity input".

A British Retail Consortium spokesman put the boot into the UBS report, by noting:

"There is no question that in the UK, customers pay less for their food than is the case in most other European countries. Food prices have not risen at anything like the same rate as commodity prices. It is clear that supermarkets are shielding customers from the full impact."

It would seem that UBS have tried to use the report to garner themselves some headlines. Unfortunately for UBS, the headlines that they have garnered are not particularly favourable to them.

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