Sainsbury's holds guidance, sees fall in food inflation

The company on Tuesday said total like-for-like sales were up 9.8% in the period, adding it had spent £60m lowering prices amid criticisms that supermarkets were fuelling inflation by widening profit margins during the cost-of-living crisis.

"Customers can see that prices at Sainsbury's have improved and this combination of great value and some good weather in recent weeks means we have grown our food volumes and market share,” said chief executive Simon Roberts.

"Food inflation is starting to fall and we are fully committed to passing on savings to our customers."

Roberts added that the chain was “putting all our energy and focus into battling inflation” as household budgets were “under more pressure than ever”, although he conceded high food price inflation would continue until at least the end of the year with inflation on packaged goods taking longer to reduce than on fresh foods.

Office for National Statistics figures showed food and drink inflation fell back to 18.3% in May, from 19% in April. Customers, whose wages have been eroded by inflation, have started to accuse the sector of "greedflation" and "shrinkflation - reducing product sizes while hiking prices.

The competition watchdog is investigating whether supermarkets are holding prices higher than necessary, while a separate investigation into fuel reported this week that supermarkets had increased profit margins during the pandemic.

Sainsbury's said it still expected underlying pre-tax profit of £640 - 700m in 2023-24, compared with £690m a year earlier.

Reporting by Frank Prenesti for Sharecast.com