Sainsbury’s CEO Simon Roberts has said grocery inflation has so far remained lower than many in the industry feared, although he warned significant cost pressures continue to build across the food supply chain.
Speaking alongside the supermarket’s first-quarter trading update, Roberts said there was still uncertainty over how prices would develop during the rest of the year, but suggested inflation could end up well below earlier industry forecasts of nine per cent by the end of 2026.
His comments come despite concerns that disruption in the Middle East and higher energy and fertiliser costs could accelerate food price inflation in the second half of the year.
Latest figures from the British Retail Consortium showed shop price inflation remained unchanged at 1.2 per cent in June, indicating price rises have stabilised for now.
The UK’s second-largest supermarket reported sales of £9.1bn in the 16 weeks to 20 June, up 2.7 per cent year on year. Grocery sales increased 3.6 per cent, ahead of expectations, as Sainsbury’s continued to invest in matching Aldi prices across hundreds of everyday products.
Roberts said customers remain focused on value but highlighted that shoppers are becoming increasingly cautious when it comes to discretionary spending.
Argos sales slipped 0.5 per cent during the quarter despite volumes rising 2.2 per cent, with discounting and a shift towards lower-priced products weighing on revenue. Roberts described the non-food market as “more subdued and more promotional” than grocery, with demand strongest for seasonal products such as fans, paddling pools, televisions and toys, while higher-ticket purchases including furniture remained under pressure.
Despite the cautious backdrop, Sainsbury’s enjoyed what Roberts described as an “exceptional week” during the recent spell of hot weather and World Cup fixtures involving England and Scotland.
The retailer recorded its biggest-ever week for sales of ice cream, pizza and salads, while fresh fruit, barbecue products and deli foods also performed strongly. Rapid delivery orders also increased as consumers stayed home to watch football and avoid the heat.
With another heatwave forecast, Roberts said colleagues and suppliers had been working “around the clock” to ensure stores remained stocked and refrigeration systems coped with higher temperatures. Sainsbury’s is investing hundreds of millions of pounds in refrigeration upgrades, with around 100 stores set to receive new equipment.
Roberts also renewed calls for the next government to prioritise economic growth and consumer confidence, urging ministers to reduce energy costs for food producers and introduce measures to encourage employment, particularly among younger workers.
“We have seen a lot of regulatory cost coming to this industry in the last couple of years and I would like to see a real focus on growth,” he said.
It also confirmed it will expand its facial recognition technology programme to a further 100 stores after a trial across 55 locations reportedly led to 90 per cent of identified repeat offenders staying away.
Shares in Sainsbury’s rose 2.4 per cent following the trading update, recovering some recent losses as investors welcomed stronger-than-expected grocery sales.
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