FactCheck: how much is your shopping?

The background

Tesco boss Sir Terry Leahy appeared on the radio this morning as his company announced impressive financial results - earnings up 12 per cent, online profits up 49 per cent.

He was asked about the rising cost of food but challenged suggestions that the "average shopping basket" had risen 11 per cent in a year, as calculated by price comparison website Mysupermarket.co.uk.

Sir Terry said: "That's not right, our food, that's all the food that we sell, would be in the order of 2 to 3 per cent increase. It might have peaked around 3 percent."

There's a big difference between 11 and 3 per cent. So who's right? Or is it just possible that both are?

The analysis

Tesco told FactCheck that it stands by the figure of 2 to 3 per cent price inflation.

Mysupermarket.co.uk stands by its figures too - namely 11 per cent inflation overall and 7.9 per cent at Tesco.

Even taking the lower Tesco-only figure from the website data, that's still more than double the figure being quoted by the retailer.

The difference then comes down to what exactly the two groups consider to be "an average shopping basket".

Mysupermarket.co.uk uses what it considers to be British shoppers' 24 staple food items (see list below), including meat dairy and grain, to calculate price inflation. It also excludes discounted items.

The 11 per cent rise is based on monthly price data for the three main UK supermarkets, Tesco, Sainsbury's and Asda.

By individual supermarket it found that prices increase in the 12 months to March were as follows: 7.9 per cent at Tesco, 9.8 per cent at Sainsbury's and 15.3 per cent at Asda.

Tesco, meanwhile, gets its figure by calculating the average price change on 20,000 of their products, including alcoholic beverages like beer, which has see a price decrease over the last 12 months.

(To add to the confusion, the consumer price index - the figure used by the government to calculate inflation - is running at 2.5 per cent. Food and beverages, however, account for less than 15 per cent of this figure.)

In fact the reason for the disparity in figures is that it is precisely staple food products that have seen the greatest inflationary increases over the last 12 months.

According to another price comparison site Moneysupermarket.com dairy, meat, poultry and grains have risen 10-40 per cent over the period, while beer has decreased.

Professor Charles Goodhart of the London School of Economics makes the point that when calculating the level of inflation on an average basket of goods; those goods should be weighted towards what the average consumer would buy.

The question then comes down to which basket of goods best reflects the average consumer? The basket containing 24 staples or the basket containing a much broader 20,000 items?

FactCheck Rating: 3

How ratings work

Every time a FactCheck article is published we'll give it a rating from zero to five.

The lower end of the scale indicates that the claim in question largely checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.

In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.

The Sources

Mysupermarket.co.uk
Radio 4 today show
moneysupermarket.com
Prof Charles Goodhart
Tesco

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