Aldi and Lidl have increased prices of basic groceries such as milk and bananas as the German discount chains have been hit by the decline in the value of the pound following the Brexit vote.
The price of a four-pint bottle of milk has been increased by 4% to £0.99 ($1.23). While this puts the German firms on par with pricing at Asda, it is just one pence lesser than the price of milk at Sainsbury's, Morrisons and Tesco.
With regards to bananas, which are priced in US dollars, both Aldi and Lidl have increased the prices of a pack by 6% to £0.72. This pricing is said to be similar to that found in all major supermarkets in the UK.
Considering the two items are most purchased in the country, this rise in prices would mark a significant change in the battle between the German discount chains and the UK's traditional big four supermarkets namely – Asda, Sainsbury's, Morrisons and Tesco.
In October, Morrisons increased the price of a jar of Marmite, which triggered other chains to follow suit. It was then said that Unilever, which owns the salty British toast spread, was also trying to increase the selling price of a few of its other products as the decline in the pound increased its input costs. Apart from Unilever, other British companies such as tea manufacturer Typhoo said that it will increase prices of its products citing the same reason.
Commenting on the move by the German chains, Bruno Monteyne, an analyst with Bernstein Research opined that the price war between the supermarkets could reverse. "Gone are the days when Aldi and Lidl can respond to every price cut by the supermarkets with an equally big price cut... Discounters raising their prices upwards to the same or higher price levels than the supermarkets on the most important food products is surely a huge leap forward," he was quoted as saying by the Guardian.
However, Matthew Barnes, CEO at Aldi UK and Ireland argued that they were still the cheapest place to shop for groceries. "We absolutely guarantee that our customers will always pay the lowest grocery prices in the UK when they shop at Aldi. This has been verified time and time again by the industry's most authoritative independent price survey, the Grocer 33, which in our most recent appearance showed Aldi to be 17.9% cheaper than our nearest competitor," he said.
Meanwhile, a Lidl spokeswoman said the price rise was made to reflect similar moves by the rest of the market.