Sainsbury’s has warned that inflationary pressures are still working their way through the food supply chain, despite reporting robust grocery sales and signs that price rises may be easing.
The UK’s second-largest supermarket said trading had been “encouraging” in recent months, but chief executive Simon Roberts cautioned that uncertainty remains over how geopolitical tensions, including the conflict in the Middle East, could affect prices later this year.
“There is pressure on inflation in the system,” Mr Roberts said.
“We’ve previously said that it would take until into the summer to see the level at which inflation would come through.
“It’s not coming through as significantly as some had expected but it is still coming through.”
His comments suggest supermarkets continue to face higher costs from suppliers, although the pace of food inflation appears to be moderating.
The Office for National Statistics recently reported that food and non-alcoholic drink inflation slowed to 2.2% in May, its lowest level since 2024.
Sainsbury’s said grocery inflation during its latest quarter was lower than in the previous reporting period.
The retailer posted a solid start to its financial year, with total retail sales excluding fuel rising 2.7% to £9.15 billion in the 16 weeks to June 20.
Sales at the core Sainsbury’s supermarket business climbed 3.1% to £8.04 billion, driven by a 3.6% increase in grocery sales as shoppers continued to respond to the retailer’s value-led strategy.
Investment in initiatives such as Aldi Price Match and Nectar Prices helped attract customers seeking lower-cost weekly shops amid continued pressure on household budgets.
However, weakness elsewhere in the business reflected the more cautious mood among consumers.
General merchandise and clothing sales fell 3.7%, with Tu clothing recording a 2.1% decline, while wider general merchandise sales dropped 6.3%.
At Argos, sales slipped 0.5%, with higher volumes offset by weaker average selling prices as customers continued to curb discretionary spending.
Mr Roberts said shoppers remained highly focused on value.
“Customers are looking for value now more than ever,” he said.
“We are consistently delivering outstanding quality at great value, so more people are choosing Sainsbury’s for their big weekly shop.”
While food inflation has eased significantly from its recent peaks, Sainsbury’s warning suggests retailers remain alert to fresh cost pressures as geopolitical uncertainty, energy prices and global supply chains continue to shape the outlook for Britain’s grocery sector.
Leave a Comment