Supermarket dynamic 'surge pricing' could be on the way, Bank of England warns

The Bank of England warned more companies are now planning to use “market-responsive pricing tools”, with around a third of firms expected to adopt them.

Clare Lombardelli, the Bank’s deputy governor for monetary policy, said digital technology had made it far easier and cheaper for businesses to alter prices.

She 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.”

Although supermarkets are not currently using surge pricing, many are moving towards digital shelf labels, which make price changes much easier to implement.

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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 plans to roll out digital displays across all 497 of its supermarkets.

Any move towards dynamic pricing in grocery stores would likely prove controversial, given that food is an essential purchase unlike concert tickets or flights.

Supporters of the model argue consumers already benefit when prices fall, and say shoppers can limit the impact by choosing where and when they buy.

Some forms of flexible pricing are already common in supermarkets, including reductions on products nearing their sell-by date.

Clive Black, of 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."