The maker of Mr Kipling cakes and Bisto gravy says it has no more price rises planned this year following a substantial easing of costs, adding to hopes that shoppers have experienced the worst of surging inflation.
“We believe the recent period of significant input cost inflation is now past its peak and have no further price increases planned for the rest of 2023,” said Premier Foods chief executive Alex Whitehouse.
The comments echo those made by several large food retailers in recent weeks indicating food inflation is moderating. On Tuesday Tim Steiner, Ocado’s chief executive and co-founder, said the UK was “over the worst” while Tesco chief executive Ken Murphy said in June that he believed “we’re past the peak inflation”.
UK grocery price inflation eased for a fourth consecutive month to 14.9 per cent in the four weeks to July 9, according to data published by market research provider Kantar, raising hopes that lower energy and raw material costs are beginning to be reflected on supermarket shelves. Overall UK inflation fell to a 15-month low of 7.9 per cent in June, a bigger than expected drop.
Premier Foods said in its trading update that sales grew 21 per cent to £231.1mn in the 13 weeks to July but warned that revenue growth was likely to moderate in the following quarters as the year-on-year impact of higher prices reduced.
Although higher prices being passed on to shoppers have boosted overall revenues for food manufacturers, many have experienced a drop in volume as consumers cut consumption or traded down to cheaper and private brands as a result of the cost of living squeeze.
PepsiCo, Nestlé and Unilever reported lower or flat sales volumes in their first-quarter earnings earlier this year.
Investors will be watching closely to see whether sales fall further amid persistently high prices when companies report half-year results in the coming weeks.
“The majority of Premier Food’s revenue growth has been price-based and that has reflected the enormous increase in costs,” said Clive Black, analyst at Shore Capital, adding that the company’s next trading update was likely to reveal disinflation but not price decreases.
Premier Foods said it did not disclose volume or pricing data. Shares in the group were up 1.5 per cent in morning trading.
Chancellor Jeremy Hunt said this week that “hopefully” consumers were starting to see the effects of falling energy prices in their shopping baskets.
“Food inflation was driven by the global cost of energy rocketing and supply chains being hit,” he added. “Yet consumers should share the upside as both issues unwind, and we’re watching closely to make sure they do.”
Source: Economy - ft.com
