British consumers may soon see prices change more frequently as supermarkets and other retailers adopt technology that allows costs to fluctuate in real time, the Bank of England has warned.
A survey by the central bank found that around one-third of firms plan to implement market-responsive pricing tools within the next 12 months, up from one in five last year.
These “dynamic pricing” systems use algorithms, artificial intelligence, and electronic displays to adjust prices based on demand, capacity, and competitor activity.
In practice, this could mean prices vary according to the time of day, customer footfall, or even weather conditions. While major UK supermarkets are installing electronic shelf labels, none have confirmed plans to implement surge pricing.
The Co-operative Group has installed digital price displays in over 700 stores and plans to roll them out across all 2,300 outlets this year. Morrisons will roll out electronic labels across its 497 supermarkets, Waitrose aims to complete its rollout by year-end, and Asda is implementing the technology in roughly 250 convenience stores. Tesco and Sainsbury’s are still testing systems.
Retailers stress that the technology is designed primarily to improve efficiency by replacing paper labels. Clare Lombardelli, the Bank’s Deputy Governor, said: “Digitalisation has radically reduced what economists call menu costs — the expenses associated with changing listed prices. Digital pricing enables firms to adjust prices frequently at negligible cost.”
Dynamic pricing is already widespread online, with companies such as Amazon frequently adjusting costs. The travel sector has also adopted the model: hotel prices now change at least monthly for 80% of bookings, compared with just 15% two decades ago.
Critics warn that dynamic pricing could be misused. During the Oasis reunion tour, some ticket buyers reported prices rising while they waited in online queues. Consumer rights expert Martyn James said: “While supermarkets may reassure us that they won’t use digital pricing structures for dynamic pricing, who is monitoring them? In almost every other sector, from airline fares to concert tickets, providers have misused their powers to change pricing without any official oversight in real time.”
Retail analyst Clive Black added: “The initial motivation for these displays is operational efficiency, standardisation, and compliance, but the long-term implication could be dynamic pricing. Whether this benefits shoppers or shareholders is debatable.”
The British Retail Consortium declined to comment directly, noting that pricing remains an operational matter for each retailer.
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