The boss of Sainsbury’s held out hope for shoppers that fresh food prices rises may be past the worst but said it would be months before it was clear if grocery inflation as a whole have peaked.
Chief executive Simon Roberts, who was unveiling a 5% fall in annual underlying profits to £690 million, said the products that went up first and fastest in prices, including milk and other fresh foods, would also be the first to top out.
However, he cautioned that there were still strong cost pressures — particularly energy — pushing up prices in other categories. He said: “In some areas it’s looking more encouraging, in others let’s see how it plays out over the next few months.”
But he insisted Britain’s second biggest supermarket chain would do “everything we can to keep prices low for customers”. Initiatives include an Aldi price match on 300 lines and the launch of new deeper discounts exclusively for Nectar loyalty card holders.
He added: “We really get how tough life is for so many households right now, which is why we are absolutely determined to battle inflation for our customers. Our focus on value has never been greater and we have spent more than £560 million keeping our prices low over the last two years.”
The Sainsbury figures for the year to March 4 come days after analysts Kantar said food inflation dropped slightly from 17.5% to 17.3% in April, suggesting that the peak is close. It followed official ONS data for March showing food price inflation hitting 19.1%, the highest level for more than 45 years.
Today consumer products giant Unilever, maker of Magnum ice creams and Marmite, said inflation for its products was running at 10.7% in the first quarter of the year.
The Sainsbury’s results show that comparable grocery sales rose 7.4% in the latest quarter, buoyed by rocketing food price inflation, while Argos sales jumped 9.3%.
The profits were at the top end of previous guidance for between £630 million to £690 million.
The group said profits for the year ahead are expected to be between £640 million and £700 million in a “still uncertain outlook for consumer spending”.
Neil Shah, director of content and strategy, at investment researchers Edison Group, said: “The supermarket chain is facing tough competition from discounters Aldi and Lidl, who are gaining market share as customers turn to their discount shelves for savings on essentials.
“The recent relaunch of Sainsbury’s Nectar card aims to regain ground and emulate market leader Tesco’s Clubcard prices, yet the company will keep contending with the challenging cost-of-living crunch in the coming months.
“While headline UK inflation figures are stubborn, Sainsbury’s will need to navigate these pressures to stay competitive in the market and avoid losing further ground.”
