Tesco chairman warns inflation could trigger rising food prices as the worst is ‘yet to come’

The chairman of Tesco has warned that the worst of rising food prices is “yet to come” and by spring there could be a 5% rise.

John Allen told the BBC’s Sunday Morning programme, “Food is a relatively small part of household spending, it’s only about 9%, that figure has halved in the last half century.

“But of course, it’s a bigger proportion for those on the lowest incomes. So I think we’re concerned particularly about what can we do to try to protect those who are hardest up, who are going to suffer most from that?

“And in some ways, the worst is still to come because although food price inflation in Tesco over the last quarter was only 1%, we are impacted by rising energy prices; our suppliers are impacted by rising energy prices.

“So the likelihood is that that inflation trigger will rise but we’re doing all we can to offset it.”

Allan added, “I predicted last autumn that food prices by the spring might be rising about 5%.

“I sincerely believe that it’s not going to be any more than that, it might even be slightly less, but that’s the sort of number we’re talking about.

“But of course 5%, if you’re spending – as some of the least well-off families are spending – 15% of your household income, is significant.

“It troubles us and I’m sure troubles many people that people may have to struggle to choose between heating their homes and feeding their families and that’s clearly not a situation that any of us should tolerate.”

He added that fuel prices are “unlikely to come down very quickly.”

Allen said, “There has been a huge surge in fuel prices in the last year. And I think our hope is that they will now stabilised and ultimately come down but they’re unlikely to come down very quickly, I think.”