Supermarket prices rebound in July as UBS see Asda and Sainsbury markups

Good news for big supermarkets but less so for consumers was unearthed by UBS, which has found the price-cutting pressure on the industry had eased because Asda has been less energetic in its price cutting than has been widely expected.

The UBS 'Evidence Lab', which has been collecting around 20,000 prices from the main grocery groups every week for the last three months, found like-for-like pricing up 0.4% year-on-year in July after a 0.9% fall in June.

This was found to be largely due to Wal-Mart's UK arm actually raising LFl prices 3.2% and Sainsbury's by 1.9%, "contrary to many investor views that Asda will soon start investing heavily in price", something UBS research team has not been seeing.

UBS said it was good news for the UK industry, and particularly its top sector pick Tesco, with pricing from the market leader falling 1.1% year-on-year in July up from June's 2.4% decline.

Producing the second largest price increase in the data was seen as a "strong sign" from Sainsbury's.

Morrisons has also seen little price cuts, down 0.6%, though UBS analysts said they "would expect to see more significant price reductions in August given the recent announcement of price cuts on 1,045 products including key grocery lines".

The "standout negative sign" from this month's pricing data was the 6.3% fall in prices from Ocado, although it was noted that this was against tough comparative figures last year with little apparent near term price cuts.

With very little sign of change in Ocado's list prices, promotional breadth and depth of cuts, its suggested Ocado "is simply promoting higher priced items and points to a different promotional strategy versus last year".