Food price inflation could rise as much as 5% in the spring, exacerbating the UK’s growing cost-of-living crisis, according to the chairman of the country’s biggest supermarket chain.
John Allan, chairman of Tesco Plc since 2015, said the worst of rising food prices is yet to come -- a development that could heap further pressure on people already facing bloated energy bills and tax increases from April.
Tesco controls about 28% of the UK grocery market. Allan’s remarks come a few weeks after CEO Ken Murphy warned the supermarket chain was facing rising costs, saying it would work to mitigate them. The Bank of England last week predicted that inflation could rise about 7% in the spring, a rate not seen in three decades, and would only subside enough to meet its target in two years.
“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,” Tesco’s Allan told the BBC Sunday morning program. “And that’s clearly not a situation that any of us should tolerate.”
Although food price inflation at Tesco was only 1% over the last quarter, the supermarket chain and its many suppliers are being hit by higher energy bills, which could act as an inflation trigger, according to Allan. Gasoline prices are unlikely to come down very quickly either, he said.
“I predicted last autumn that food prices by the spring might be rising about 5%,” Allan said. “I sincerely believe that it’s not going to be any more than that, it might even be slightly less. 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.”
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Unless workers get a major pay bump, the broad-based price increases on food, clothes and gasoline are going to tighten the vice on pockets even more. The Bank of England last week increased its key interest rate at a second straight meeting as it tries to prevent a catastrophic squeeze from overwhelming households and the economy.
Tesco shares were little changed in London trading early Monday.
Photo: Bloomberg
