Price rise comes amid fears of bottled water shortages as thirsty Britons try to cope with temperatures soaring above 30C

People relax in deckchairs in Brighton
© Will Oliver/AFP/Getty ImagesSunbathers relax on Brighton Pier: grocery stores are typically seeing sales of bottled water double as the hot spell continues.
Tesco has put up the price of its most affordable water and fizzy drinks amid a surge in sales as thirsty shoppers try to cool down during the hot spell.

The UK's biggest supermarket raised the price of its two-litre bottles of Everyday Value water and cola by 41% to 24p last week, putting it well ahead of rivals Asda, Sainsbury's and Morrisons.

"This is not a very smart move," said Neil Saunders, managing director of retail consultancy Conlumino. "I find it quite surprising that Tesco has moved its price when its competitors haven't. They will not only get angry customers, if they notice, but this makes Tesco less competitive when there is a price war on in grocery."

The price rise came amid fears of bottled water shortages, with sales in overdrive as the nation tries to cope with temperatures soaring above 30C in parts of the country.

"I have never seen anything like it and I have been in this job over 15 years," said James Smith, the managing director of Shepley Spring, a company that supplies own-label water for large retailers including Morrisons and Sainsbury's. He said demand had increased dramatically early last week.

Grocery stores are typically seeing sales of water double. Sales of Shepley Spring's own brand, Ice Valley, were up 500% last week so that in three days all 2m litres of its stocks laid by for summer had gone.

The company is running its four bottling lines 24 hours a day, seven days a week, to keep up with demand. Smith said he had received frantic calls from shops he does not normally supply and even from water utilities wanting emergency backup supplies.

"Retailers are selling a lot and panicking about selling out. Some water brands have got major shortages," he said.

Tesco said its price increase last week reflected the cost of production, which it kept as low as possible. A spokesman said: "We think four bottles of filtered water, cola or lemonade for less than a pound is still very good value."

But retail watchers said Tesco's customers were unlikely to agree.

"Tesco has probably jacked the price up because it's hot and product is going out the door. It's taken a commercial heartless view but its not necessarily one all its punters will like," said Clive Black, a retail analyst at Shore Capital. He said the price hike suggested that either Tesco was trying to ration drinks because supplies were tough to come by or it wanted to increase its profits.

Tesco's move comes just days before it launches its new Love Every Mouthful advertising campaign. The supermarket is battling to improve its image after losing market share to rivals after several of its beef products were found to be contaminated with horsemeat earlier this year.

Saunders at Columino said Tesco's decision to raise the price of its water and fizzy drinks was a "PR disaster waiting to happen" for the supermarket.

"This kind of thing really hacks customers off and the amount of money they will make is minuscule compared to Tesco's profitability," Saunders said.

As the Met Office issued a heatwave alert for London and south-east England sales of summery goods were soaring. But department store John Lewis partly blamed the weather for keeping shoppers away last week. The employee-owned retailer said department store sales fell 8.7% year on year to £64.2m in the week to 13 July. Sales of homewares were worst affected but sales of fashion and electrical goods were also down.