Supermarkets could introduce “dynamic pricing”, allowing them to increase the cost of goods when demand is high, the Bank of England has warned.
Consumers are already used to such pricing methods when they use Amazon, Uber or buy tickets for flights or concerts. But it could now become commonplace for even the most essential items, such as food.
The Bank says a third of companies are planning to use “market-responsive pricing tools”, up from one in five at present.
Clare Lombardelli, the deputy governor for monetary policy at the Bank, said: “Digitalisation has radically reduced what economists call menu costs – the expense of changing listed prices – so-called historically because of the costs associated with having new menus printed with updated prices. Digital pricing allows firms to change prices frequently at negligible cost.”
So far, supermarkets have been tight-lipped on their pricing plans. While they are not using surge pricing yet, they are introducing digital price displays, which make it easier to change prices quickly.
Ms Lombardelli added: “We are seeing some sectors experimenting with technology that could enable dynamic pricing in the future, such as electronic shelf labels in supermarkets, which are already widespread in Europe.”
Morrisons has said it will soon have digital displays in all 497 of its supermarkets.
A move to digital pricing would be hugely controversial and would likely attract strong opposition from MPs, since food is an essential item and concert tickets are not.
Consumers are already fearful of rising fuel costs that feed into inflation for many other goods and services after disruptions to supply due to the Iran war sent costs spiralling.
Defenders of dynamic pricing point out that no one objects when prices fall and that consumers can protect themselves by choosing when and where they shop.
Supermarkets already cut the cost of items reaching their sell-by dates, a form of dynamic pricing that helps those who are economising.
Industry trade body the British Retail Consortium said it has no policy on dynamic pricing yet, but expects the grocers to make their plans clearer very soon.
Clive Black, of stockbroker Shore Capital, told The Times: “Changing prices is very expensive. When Tesco changes prices, it has to replace a piece of plastic or cardboard across thousands of stores. The initial drive for these displays is operating efficiency, standardisation and compliance, but the longer-term possibility is dynamic pricing. Whether that is in the interest of shoppers or shareholders is a moot point.”
Dynamic pricing has been used for tickets to the 2026 World Cup, which saw a small number of the cheapest tickets available at $60 (£48) and the most expensive, for the final, costing up to $10,990 (£8,197) .
