Food inflation’s easing but labour costs will stop prices falling back as low as they had been, Sainsbury’s boss warns
FOOD inflation is starting to ease but high labour costs will prevent prices falling back as low as they had been, Sainsbury's boss warns.
Supermarkets have been accused of “greedflation” amid claims they are using high food prices to boost profits.
But Simon Roberts, chief executive of Sainsbury’s, pushed back and said profits had fallen as a result of its efforts to lower prices for shoppers.
The grocer is now making less than 3p in the pound, he added.
Mr Roberts said: “Food inflation is starting to fall and we are committed to passing on savings to our customers.”
Sainsbury’s said that it had already cut prices of 120 items, including bread, butter, milk, pasta, chicken and toilet roll.
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But Mr Roberts admitted these were all items that have seen the biggest price jumps over the past year.
The UK’s second biggest supermarket has relaunched a larger range of budget groceries called Stamford Street, an Aldi Price Match promotion and discounts for Nectar members.
The grocer said its 100 top-selling items are cheaper than they were three months ago, despite industry-wide inflation.
Mr Roberts’ efforts to make Sainsbury’s more competitive have paid off with food sales rising by 11 per cent in the past quarter.
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Despite this, the retailer has not raised its profit targets, which disappointed some investors.
Official food inflation figures slipped from 19.1 per cent to 18.4 per cent in May.
But prices are still considerably higher than they were at the start of 2022, with bread and butter more than 20 per cent more expensive.
Mr Roberts said that while the cost of transport, shipping and ingredients were starting to fall, labour costs have risen by ten per cent and would not drop.
He added: “Prices are not going back to where they were because the cost of producing food is clearly elevated from where it was a year or two ago.”
THREADY TO RUMBLE
FACEBOOK owner Mark Zuckerberg has landed his first blow in a grudge match with rival tycoon Elon Musk after unveiling a new app to rival Twitter.
The Meta version, called Threads, will go live tomorrow and can be pre- ordered and linked to users’ existing Instagram accounts.
Mr Zuckerberg’s Meta, which owns Facebook and Instagram, has told industry execs that it wants to launch a “sanely run” platform.
The comment is an obvious swipe at Mr Musk who has made a series of abrupt changes since buying Twitter for £34billion, including limiting the number of posts users can see.
Mr Musk has claimed the social media site was close to running out of cash.
In a bizarre move, the two billionaires have agreed to a cage fight with each other.
Musk has said the bout could take place in Las Vegas or even the Colosseum in Rome, where gladiators used to fight to the death.
Both men have recently posted pictures of their intense training regimes.
OFWAT: THAMES IN A HOLE
THE head of the water regulator told MPs yesterday that Thames Water will need “substantial sums of money” to sort its finances.
David Black, boss of Ofwat, told a House of Lords committee the watchdog should have stepped in to prevent Thames Water’s owners from piling up £14billion of debt in 2006.
However, he said that during that time regulators had a “hands off” approach and did not have powers to do so.
Now Ofwat can block dividends if a utility is viewed as financially stretched.
Thames Water is in talks to raise £1billion, but Mr Black admitted its existing investors may be unwilling to put more money in.
The Government is exploring a special administration of Thames Water which would mean putting it under state control.
Mr Black said he “didn’t see the same level of issues” elsewhere in the sector.
DIET FIRM GUZZLED
HEALTHY food firm Foodhak has bought a celebrity diet company that has worked with Adele, Mel C, Michael McIntyre and Denise Van Outen.
Balance Box was set up by diet guru Jennifer Irvine 20 years ago and worked with celebs and sports stars before struggling to recover from the pandemic.
Foodhak uses AI to mine clinical health trials and personalise meal plans that have medical benefits.
JUST 18 companies have listed on the London Stock Exchange in 2023, raising £650million, compared with 47 in 2021, raising £9.4billion.
We Soda scrapped a £6billion London listing, blaming lack of investor appetite
GORMLEY IN NAKED RESCUE
NAKED WINES has turned to its founder for a second time to revive its fortunes after sobering sales.
The online offie said that Rowan Gormley, who started the firm in 2008, would be returning as chairman, taking over from David Stead who will be leaving with immediate effect. Mr Gormley was brought back as a board adviser in 2022 after a string of profit warnings.
Naked Wines yesterday disappointed the City by delaying publication of its full-year results and saying that sales were below expectations.
The business said in order to deliver profitable growth it needed to focus on winning more customers quicker.
Shares in Naked Wines fell by ten per cent to 89p, valuing the firm at just £67million.
INEOS IS HOPING TO CLEAN UP
INEOS boss Sir Jim Ratcliffe is hoping to spruce up sales with a range of laundry products.
The industrial tycoon’s interests already include chemicals, oil fields, French football club Nice, a stake in Formula 1 team Mercedes-AMG Petronas and utility vehicle Grenadier.
Now he is setting his sights on home cleaning.
Ineos Hygienics, which launched hand gel during the pandemic, is taking on firms such as Unilever and Proctor & Gamble with 16 household products with “active fragrances” said to improve sleep, and help concentration at work.
Yesterday Sir Jim criticised the competition watchdog’s blocking of Ineos’s £780million takeover of cement firm SIKA.
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Sir Jim said: “This is yet another example of a deal being stopped that would benefit the UK.
“Add the ridiculous North Sea windfall tax and continuing high energy costs and we see a government driving business out of the UK.”