Food prices won’t drop quickly, warn supermarkets

Supermarket bosses have said they do not expect food prices to fall next year, suggesting that inflation will persist through 2024.

According to a report in The Times, Sainsbury’s chief executive Simon Roberts stated last week that he did not expect the industry to move into deflationary territory next year, citing rising wages and high energy costs.

The management of Iceland, the frozen food chain, told investors last week that it expected food price inflation of 4-6 per cent at the end of its financial year in March.

The national living wage, which acts as a reference point for pay up and down the food supply chain, is forecast to rise above £11 an hour in April, up from its current £10.42. Labour costs are typically the biggest factor in food price inflation.

Roberts stressed that inflation was consistently falling.

“It is our priority to make sure we are passing on savings to customers … we’ll continue cutting prices wherever we can,” he said.

Outgoing Morrisons boss, David Potts, has also said that while the worst of food inflation is over, yet he warned that vegetable lines were likely to surge in price ahead of Christmas.

Food inflation is proving to be among the more stubborn inflationary pressures. Inflation, measured by the consumer prices index, peaked at 11.1 per cent in October last year. Food inflation hit its peak of 19.1 per cent in March, falling to 12.1 per cent in September.

The Bank of England expects inflation to have fallen to 4.8 per cent in October because of changes to the energy price cap. It said food inflation should be 9 per cent in the past three months of this year and 5 per cent in the first three months of next year.