UK supermarket chain J Sainsbury has provided further evidence that food price inflation is easing, as the group reported an almost 10 per cent increase in sales.
“Food inflation is starting to fall and we are fully committed to passing on savings to our customers,” Sainsbury’s chief executive Simon Roberts said in a trading update on Tuesday. “Prices on our top 100 selling products are now lower than they were in March.”
Households are facing the biggest squeeze in living standards since the 1950s. Inflation remained at 8.7 per cent in May, according to official figures, while mortgage borrowing costs have risen sharply.
Data provider Kantar published figures last week showing food price inflation had slowed for a third consecutive month, although it remained a big factor in overall inflation.
The comments by Roberts echo those of Tesco chief executive Ken Murphy who last month said there were “encouraging” signs that inflationary pressures were easing.
Sainsbury’s on Tuesday reported a 9.8 per cent increase in like-for-like sales, excluding fuel, for the three months to June 24, driven by volume growth rather than price increases, the company said. Grocery sales rose 11 per cent, with general merchandise up 4 per cent, ahead of analysts’ expectations.
Roberts warned that although food price inflation was coming down, prices were “not going back to where they were because the cost of producing food is clearly elevated from where it was a year or two ago”.
Labour costs are up 10 per cent year on year, he added.
Food prices were falling most in fresh food, where they had risen the most over the past year or so, but inflation was more persistent in other categories.
Roberts again rejected claims that supermarkets were “profiteering” on food prices, saying profit margins of less than 3 per cent were at their lowest “for a number of years”.
The group kept its forecast of underlying profit before tax of between £640mn and £700mn for the year unchanged.
Asked who might be benefiting from surging inflation, Roberts said: “No one wants inflation at this level. Customers don’t want it. No business wants it. Clearly the government doesn’t want it.”
Source: Economy - ft.com
