According to Sainsbury’s CEO, shoppers are adding more items to their baskets as the company starts to lower the price of some essentials, which is why food inflation is starting to decline.
The supermarket is “putting all our energy and focus into battling inflation,” according to Simon Roberts, the chief executive, as household budgets are “under more pressure than ever.”
He cited the chain’s Aldi price-matching strategy and the implementation of exclusive price reductions for its Nectar loyalty-scheme members as evidence that “we have zero complacency on this issue.” “Inflation will continue to be a problem, and customers need to know that we truly have their best interests in mind.”
Grocery prices are still rising rapidly: Office for National Statistics figures showed food and drink inflation fell back to 18.3% in May, from 19% in April – still among the fastest rates in decades.
Roberts agreed with recent comments by the boss of Tesco, that food prices would not return to levels seen before the start of the cost of living crisis. He said “the cost of producing food was clearly elevated” as higher wages were “locked in” for both retailers and their suppliers, while energy prices remained stubbornly high.
“We all want energy costs to come down quicker but that is taking some time,” he said.
Inflation on Packaged Goods
Roberts said relatively high food inflation would continue until at least the end of the year with inflation on packaged goods taking longer to reduce than on fresh foods.
The UK’s second largest supermarket chain, which also owns Argos, reported that like-for-like sales – those in stores open for more than a year – excluding fuel rose by a better than expected 9.8% in the 16 weeks to 24 June, partly thanks to an increase in the number of items sold, reversing a trend of shoppers cutting back.
Grocery sales jumped 11% while general merchandise such as household goods grew by 4%, including a 5.1% rise at Argos, helped by the warmer weather towards the end of the period and the string of bank holidays. Clothing sales fell 3.7%, held back by the cool start to the spring.
Sainsbury’s said it had put more than £60m into cutting the prices of basics including bread, milk, pasta, chicken and toilet roll since March in a market where prices continued to rise