Food inflation is beginning to fall, says Sainsbury’s boss

Food inflation is “starting to fall”, Sainsbury’s has mentioned, because the retailer noticed gross sales boosted by financial institution holidays and hotter climate.

The UK’s second largest grocery store mentioned on Tuesday it expects pre-tax earnings of between £640m and £700m for 2023 as grocery gross sales grew attributable to decrease costs, however gas gross sales sharply fell.

It mentioned gross sales returned to progress final 12 months regardless of value of residing pressures on households, in a buying and selling replace for the primary quarter of its 2023-2024 monetary 12 months – the 16 weeks as much as 24 June.

Grocery gross sales elevated 11% within the interval because the retailer mentioned value reductions led prospects to purchase extra.

As prospects handled foods and drinks inflation, gross sales of decrease value ranges grew.

More than £60m was spent on value cuts throughout 120 important objects, Sainsbury’s chief govt Simon Roberts mentioned.

Prices on the highest 100 promoting merchandise at the moment are decrease than they have been in March, he added.

While Mr Roberts mentioned meals inflation was beginning to fall, newest official figures confirmed the speed of food inflation remained at a stubbornly high 18.3%.

Overall shop prices rose 8.4% over the 12 months to June, a slowdown from the 9% recorded within the 12 months as much as May, analysis from the British Retail Consortium and retail analysts NielsenIQ confirmed.

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Sainsbury’s sturdy gross sales have been additionally attributed to heat climate and “particularly strong performance” over financial institution holidays. It additionally reported its best-ever Easter weekend.

Growth was additionally pushed by spending in comfort shops and supermarkets, because the buying and selling replace mentioned prospects continued to return to shops.

Not all corners of the enterprise grew.

Clothing gross sales have been down 3.7% attributable to cooler climate, although gross sales strengthened when hotter climate arrived.

Fuel gross sales fell a steep 21.4% over the 16 weeks, far larger than the two.8% drop within the last quarter of the final monetary 12 months. In the identical 16 week interval as much as June final 12 months gross sales grew practically 50% (48.3%).

It follows an investigation from the Competition and Markets Authority (CMA) into the gas market which discovered elevated grocery store revenue margins led to drivers paying an extra 6p per litre for gas.

Mr Roberts mentioned: “We are putting all of our energy and focus into battling inflation so that customers get the very best prices when they shop with us, particularly now as household budgets are under more pressure than ever.

“Food inflation is beginning to fall and we’re totally dedicated to passing on financial savings to our prospects.”