Former Sainsbury's chief warns of rise in supermarket prices

Prices in UK supermarkets will rise by at least 5% over the next six months, said former Sainsbury's chief executive Justin King.

King told the BBC Newsnight that the fall in the value of the pound since the UK's decision to leave the European Union would cause "a profound change" for supermarkets.

King, who ran Salisbury's for a decade until 2014 and is now vice-chairman of the investment firm Terra Firma, said some supermarkets will be "squeezed in the jaws" of resisting price rises while also dealing with increased costs, and says some companies may not survive.

The plunge in sterling has meant that imported food ingredients and packaging have become more expensive.

"Around 40% to 50% of what we buy is sourced abroad in a currency other than the pound, so with the current rates of exchange we could expect those things to be about 10% more expensive. And if that's about half of what we buy, then that means something of the order of 5% inflation," he said.

His claim was supported the Food and Drink Federation's director general Ian Wright, who also told the BBC he expected prices to rise next year by "somewhere between 5 and 8%".

Wright said the full impact of the weak pound may not be seen for another year, but it would make the UK grocery market even more competitive.

"Businesses that are already stretched, perhaps with lower margins and less strong relationships with customers - they are the ones that are going to suffer because they will be squeezed in the jaws of not being able to pull up prices, while costs continue to increase," Wright said.