Tesco chairman John Allan
(Picture: PA)Many cash-strapped families are “suffering”, the boss of Tesco said on Friday, as new figures showed that Christmas proved tougher for UK retailers than expected.
Retail sales dropped by one per cent in December as soaring inflation forced shoppers to cut back. Economists had predicted a 0.5 per cent rise. Although food sales proved more resilient, dropping just 0.3 per cent, non-food shops saw a 2.1 per cent fall.
John Allan, chair of Tesco, said the figures were “very predictable” given the “pressure that many millions of our fellow citizens are under at the moment”.
He added on BBC Radio 4’s Today programme: “The reality is that many, many people in this country are suffering through this cost-of-living crisis. It impacts some much more than others.
“My hope would be that people tried to have the best possible Christmas they could, which was why food sales were reasonably sound over Christmas. But they’ve had to economise on many other things.”
The benchmark Consumer Prices Index measure of inflation fell to 10.5 per cent in December from 10.7 per cent in November, suggesting the crisis may have peaked. Bank of England governor Andrew Bailey yesterday sounded a cautiously optimistic note when he said the drop was “the beginning of a sign that a corner has been turned”.
“What we think is the most likely outcome is that [inflation] will fall quite rapidly this year, probably starting in the late spring and that has a lot to do with energy pricing,” he said. Experts at Cornwall Insight also adjusted their forecasts on energy bills for the year ahead, predicting the Ofgem energy price cap for typical households will fall to £2,200 from July — £800 lower than the £3,000 limit set by the Government’s energy support scheme.
The improving picture on inflation has sparked fresh calls from some Tory MPs for Chancellor Jeremy Hunt to start cutting taxes in his Budget in March.
Mr Hunt is reportedly considering extending the 5p cut in the price of petrol and diesel for another year. Senior Tory MP Sir Iain Duncan Smith said: “Let’s start moving the economy forward by lowering taxes as soon as possible.”
But Prime Minister Rishi Sunak appeared to resist the calls for tax cuts, telling an audience in Morecambe, Lancashire: “I’m a Conservative, I want to cut your taxes... I wish I could do that tomorrow, quite frankly, but the reason we can’t is because of all the reasons you know. You’re not idiots, you know what has happened.”
