COST OF LIVING UPDATE
How we are helping you get a fair deal
26 JULY 2024
The CMA
At the Competition and Markets Authority we help people, businesses and the UK economy by promoting competitive markets.
Our work makes a difference to millions of people across the UK, making sure that competition works for their benefit.
Competition and consumer protection law helps us to protect people and businesses as we investigate sectors across the economy.
Message from our Chief Executive
At a time when household budgets are under huge strain, it’s our job to make sure people can be confident they are getting good deals and that they are not being harmed by weak competition or unfair sales practices.
Despite inflation falling to 2%, many people are still struggling to pay for everyday items – whether it’s filling up at the pump, buying groceries, feeding babies, treating ill pets, or having somewhere to live.
Last year we found that competition in the road fuel market was failing consumers, and published proposals that would revitalise competition amongst fuel retailers. One year on and drivers are still paying too much.
"We will continue to take action so you can be confident you are getting a fair deal"
We want to work with government to put in place our recommendation of a real-time fuel finder scheme to kick-start competition among retailers. This will put the power in the hands of drivers who can compare fuel prices wherever they are, sparking greater competition.
Keep reading to find out how we are working to tackle cost of living pressures.
Road fuel
Drivers are still paying too much at the pump
Last year we published our study of the road fuel (petrol and diesel) market. It found that competition between retailers had weakened since 2019, meaning that drivers were paying more to fill up.
We estimate that, if prices were clearer and it were easier to shop around, the driver of a typical family car could save up to £4.50 a tank within a 5-minute drive.
Together with government, we have taken action...
To improve the situation, we recommended that the government:
- introduce a fuel finder scheme that allows drivers to access live, station-by-station prices
- create new statutory powers to hold retailers to account
The then-government accepted these recommendations, and decided it will be the CMA's job to keep an eye on the industry.
...but prices are still too high
Our latest monitoring report has found that weakened competition persists, meaning prices are still too high.
Retailers' margins – the difference between how much they pay for fuel and how much they sell it for – are still much higher than in the past.
We think that a fuel finder scheme would help drivers to find the best deal, and drive down prices.
In the King's Speech, the government has committed to introduce a Digital Information and Smart Data Bill. This could provide the necessary legislative basis to set up the fuel finder scheme – which we would welcome.
Groceries
Helping you get a fair deal on your weekly shop
Being able to buy food and groceries at affordable prices goes to the heart of why competition matters to our daily lives.
While supermarkets and other grocery retailers are generally competing well, not everyone benefits. You might be losing out on the best deals if you can't travel to a larger store, or you can't get online. And food prices have still risen sharply since the pandemic, stretching family budgets.
We have been investigating fairness and competition in the grocery sector, in the context of cost of living pressures and food price inflation.
Is the price right?
When you shop, it's important you get clear and accurate information about prices. We have been looking at various pricing issues and how they affect shoppers:
Do stores make it easy to compare prices for the same product?
You might think that if you buy the biggest box of teabags or block of cheese, it will be the cheapest on a per unit basis, but this isn't always the case. It's always worth comparing, but does the store make that easy?
Our review of grocery retailers' unit pricing practices found several problems that could be making it harder for shoppers to compare. This is particularly concerning when prices are rising.
The problems we found include:
- missing or incorrect unit prices
- unit prices that are too difficult to read
- different units of measurement being used for the same type of product (like toilet roll being priced per 100 sheets or per roll)
- issues with unit pricing for products on offer
We have recommended that the government change the rules on price marking, so that shoppers can access better information.
Are prices marked clearly and accurately?
We published the findings from our review of the price marking practices of 139 grocery stores in England and Wales in May 2024. During this review, we identified that some independent and smaller grocery retailers are failing to display clear and accurate prices, as required under consumer law.
The most common types of issues seen were missing prices, conflicting prices (for example, instances where prices indicated on products conflicted with those shown on shelf edge labels) and prices not being displayed sufficiently close to products.
With shoppers looking for the most competitive prices, it is important that they can easily see how much their shopping will cost and are able to shop around and compare prices with confidence. Where this is not the case, shoppers’ trust in grocery retailers may be undermined.
As a result of the findings from this review, the CMA, in conjunction with Trading Standards, produced compliance materials aimed at helping independent retailers understand what they need to do to comply with the law.
How do loyalty prices affect our behaviour?
Some shoppers have turned to loyalty schemes to access discounts.
We're reviewing loyalty scheme pricing to assess whether the savings on offer are genuine.
We are also carrying out a consumer survey to understand the impact of loyalty scheme pricing on how we shop.
Our analysis – involving tens of thousands of loyalty price promotions – is ongoing, but the results to date suggest it is unlikely to identify widespread evidence of loyalty promotions that mislead shoppers.
Infant formula
Parents could save by shopping around
Infant formula is a vital part of the weekly shop for many parents and carers across the UK. They rely on it to ensure their babies get the best possible start in life.
But the cost of infant formula has risen sharply in recent years. Last year, we found that the average price of a pack of powdered cow's milk-based formula had risen by over 25% between March 2021 and April 2023.
There have been concerning reports of people, struggling with cost of living pressures, resorting to extreme and unsafe measures to keep their babies fed.
HOW to save
Breastfeeding is an important public health priority for governments in the UK.
But there are circumstances where it isn't possible, or only possible in combination with bottle feeding. And as a parent, you may decide not to breastfeed, or to combination feed.
Many parents are, understandably, not focused on comparing products and prices when they start buying formula. Once you find something that works for your baby, you want to stick with it.
Unlike other essentials, there is little evidence of parents switching to cheaper options as prices have risen. This means that family budgets have had to absorb the price increases. But you could save a lot of money by buying a cheaper formula.
We're looking closely at the market to get to the bottom of this. In particular, we want to know if parents are getting the information and advice they need to make the best choices.
In our report last Autumn, we found that you could make significant savings, of more than £500 in the first year of a baby's life, through buying a cheaper formula.
Vet services for pets
If your household is one of 16 million in the UK that owns a pet, then you probably see it as part of the family.
Our initial review of the sector identified issues with:
- non-transparent pricing
- an out-of-date regulatory framework
- significant consolidation which may be leading to a lack of competition in some local areas
We also have a concern that large groups may have the ability and incentive to concentrate on providing higher cost treatment options.
Check out our tips to help pet owners when choosing a vet practice and treatments.
Our investigation into the market
We want to know:
- do pet owners have the information they need to make informed decisions when choosing a vet practice?
- are they paying too much for medication, prescriptions or cremations?
- are large corporate groups, which own most vet practices across the country, giving pet owners a fair deal?
- in parts of the country where there are only a handful of vet practices, how does that affect pet owners?
We also want to be sure that the current regulations are still working as well as they should.
We will publish our draft report in spring 2025.
Potentially unfair online sales tactics
Shoppers should not be pushed into snap decisions
Online shopping is often designed to make our experience smooth and simple. But it can also be designed in a way that weakens competition or risks harming the customer.
Some businesses use pressure selling tactics – like misleading countdown timers and urgency claims – to push shoppers into making snap decisions or spending more than they planned.
Last year we wrote an open letter to UK businesses, explaining how common online tactics can mislead customers or apply unfair pressure.
OUR 'RIP-OFF TIP-OFF' CAMPAIGN
Through our 'Rip-off Tip-off' campaign, we are helping shoppers spot and avoid misleading online practices that could result in them being ripped off.
If you spot a sneaky sales tactic, you can report it to us.
LEARN TO SPOT POTENTIALLY UNFAIR SALES TACTICS
urgency claim
Sometimes you will be told to 'act fast' or 'hurry' because a product is selling out.
Or you might be told that several other people are looking at the product too.
Some businesses make these claims even if there is no shortage or need to rush, so you feel more pressure to complete your purchase.
price reduction claim
If a business tells you about a new price reduction, it would be fair to assume it's real.
But what if the sale price has been the product's usual price for a while now? Are you really making a saving?
Where possible, check the price history before you buy.
checkout timer
A checkout timer will tell you that you have limited time to complete your purchase.
But is this true? If the timer runs out or you refresh the page, what happens?
Some businesses use misleading timers to rush you into making a decision.
We investigated deal website Wowcher for potentially unfair claims
Last year we investigated the deal website Wowcher, after concerns that their marketing claims might be misleading or unfairly pressuring customers. We were concerned that most products on Wowcher’s site continued to be available at a similar price once the daily countdown timer had ended.
This month (July 2024), Wowcher committed to change its online selling practices to avoid potentially misleading or unfairly pressuring consumers into making quick purchases. This means millions of people can expect to see clearer and more accurate claims about the availability of products and services.
Over the coming year, Wowcher must report back to us on how it is meeting the commitments it signed. It will also refund over 870,000 customers, to a total amount of around £4 million, who were signed up to Wowcher's 'VIP membership' via a pre-ticked box in credit with the option to convert to cash.
Housing
Helping to make the market work for everyone
The way the housing market works has a significant impact on the finances and living conditions of almost every person in the UK.
The CMA is focused on this market because we know that it isn't working well. We are determined to make sure that competition issues and unfair business practices do not raise costs, limit choices or reduce quality.
What we're doing
Ground rent and leasehold: clearing up contracts
When investigating the leasehold industry in England, Wales and Northern Ireland, we found evidence that buyers were potentially misled or taken advantage of.
Since 2019, we have investigated the potential mis-selling of leasehold homes and contract terms that could break consumer law, leading to landmark changes.
We have secured agreement from freeholders to remove problematic ground rents clauses in contracts, in some cases doubling ground rents every 10 years. These terms can leave you trapped in a home you cannot sell or mortgage.
So far, we have helped over 21,000 households with doubling ground rents or other leasehold problems.
Private rental: do you know your rights?
Given the size and importance of the UK's rental housing market, it is essential that landlords follow consumer protection law and treat tenants fairly.
Last year, we set out to identify the most important issues facing landlords and tenants across the UK. We found that there is a lack of information available to tenants and landlords about their rights and duties.
We have also been reviewing the event fees charged by some providers of retirement villages.
Green heating and insulation
It is crucial that you can make an informed decision when buying a green heating or insulation product – and that you understand your key rights and protections under consumer law. The more confident consumers are in the sector, the more it will grow.
Last year, we recommended to the government to:
- make trustworthy information available to help people make the best decision when buying a product
- require businesses to join an approved alternative dispute resolution scheme, so that customers can uphold their right to redress
- carry out a broader review of the landscape of organisations that oversee quality and consumer protection standards in this sector
BEFORE YOU BUY
If you're thinking of buying a new 'green' heating or insultation product, check out our guide to your rights and key questions to ask
Housebuilding
The UK needs a housebuilding market that is working in the best interests of people, businesses, and the economy.
Last year, we carried out a study of the housebuilding market. We found that, overall, it is not delivering well and has consistently failed to do so for decades.
Most importantly, too few houses are being built, especially in the areas where they are most needed.
In our view, action is needed to:
- address the growing role of private estate management arrangements, and the negative effects this can have
- improve quality and redress routes for consumers
- improve the planning system
- deliver the number of homes required to meet targets which go beyond the level private homebuilders have an incentive to provide.
We have also launched an investigation into suspected breaches of competition law by 8 housebuilders.
What's next?
The CMA is committed to protecting you from unfair practices, and helping to ensure you can choose and access fair deals with confidence.
We will not hesitate to call out and take action where we identify problems. We can also offer reassurance when the evidence shows that there isn't a market failure.
We will continue to champion your rights through our investigations into potentially misleading claims and unfair tactics from retailers.
The CMA has an important role to play in tackling pressures on household budgets and delivering economic growth. We will continue to work with our stakeholders, including consumers and businesses, taking action where it is needed the most.
We know there is more to do, and the CMA is ready and willing to use the full extent of our toolkit to mitigate ongoing cost of living pressures, working hand in hand with the UK and devolved governments to support them on delivering their missions for the future of UK people, businesses, and the economy.
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