Your commercial news-round up: grocery prices, Thames Water, pensions, car production

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Prices at UK supermarkets are on the rise and Thames Water faces a record-high fine. Meanwhile, the UK government has plans to change how pensions are invested and UK car production fell significantly in April. Keep reading this week’s round-up for more!

• UK Grocery price inflation jumped to 4.1% in the past month, the highest level since February 2024, with the rising cost of butter, chocolate and suncream all cited as reasons for the increase. Data collected by market research company Kantar found that shoppers are turning to discount deals and supermarket own-brand products to manage budgets. This has benefitted budget supermarkets Aldi and Lidl, which have enjoyed a combined growth of 8.4% since January 2024. Overall spending rose ahead of inflation in part because of the uncharacteristically hot weather in May, which saw more people buying burgers, salad and coleslaw. For example, Marks & Spencer and Co-op sales saw an increase of 12.3% and 0.6%, respectively, despite recent cyberattacks. Head of retail and consumer insight at Kantar, Fraser McKevitt, said: “We’ve been firing up the barbecues a bit earlier than last year, with chilled burgers flying off the shelves and sales growing by 27%.” Asda was the only supermarket to record a decline in sales, which were down by 3.2%.
   
• Thames Water has received a record-high £122.7 million fine from regulator Ofwat for breaching rules over sewage spills and shareholder payouts. Ofwat said that the company had "let down its customers and failed to protect the environment". It also confirmed that fines will be paid by the company and investors and not customers. Releasing raw sewage is allowed during storms to prevent overflows; however, Ofwat found that three-quarters of the company’s overflows had been spilling "routinely and not in exceptional circumstances". A £104.5 million penalty has been issued in relation to sewage operations, in addition to a £18.2 million fine for breaches relating to shareholder payouts. Thames Water has emphasised that it takes its “responsibility towards the environment very seriously". The water company has £20 billion worth of debt and was expected to have run out of cash by mid-April, before managing to secure a £3 billion rescue loan. It’s stated that it’s currently looking for new investors.
   
• The UK government has outlined planned changes to pensions, including the creation of a £25 billion ‘megafund’, which will “mean better returns for workers and billions more invested in clean energy and high-growth business”, according to Chancellor Rachel Reeves. Seventeen of the UK’s pension firms have agreed to invest 10% of their assets into homebuilding, infrastructure projects and start-up businesses in fast-growing sectors, instead of publicly traded shares, as part of a voluntary agreement. According to the treasury, changes could see a £6,000 boost to workers’ pensions. Director at the Pensions and Lifetime Savings Association, Zoe Alexander, explained: "Increased consolidation has the potential to improve retirement outcomes through improved governance, wider investment diversification and improved bargaining power.” The reforms are set to be reviewed in parliament under the Pension Schemes Bill.
   
• UK car production fell to its lowest level of output in April for more than 70 years (excluding 2020, when covid-19 halted production). Just over 59,000 cars were made – a figure that’s 16% below the same period last year and 25% lower than March 2025, where numbers were likely boosted by manufacturers shipping more cars before US tariffs kicked in. On top of this, exports in April fell by 10.1% due to less demand from the US and EU – the UK’s biggest export markets. The Society for Motor Manufacturers and Traders also explained that the wider shift from petrol to electric cars has resulted in reduced output. However, it stated that new trade deals with the US, EU and India may boost production.

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