Consumer woes to ease as food price inflation will decrease, predicts Sainsbury’s CEO

The British supermarket industry is set to experience a decrease in food price inflation over the next six to nine months. That is according to Sainsbury’s chief Mike Coupe.

In an interview he declared the UK food market to be “over the hump” of inflation and expected to see a decrease in the rate at which food prices are rising.

Coupe’s predictions indicate the decrease after a period of unusually rapid inflation. In October 2017, British food prices rose the fastest they had in four years. Coupe suggested this was a result of the vote to leave the European Union, the true effects of which is now being felt. The period of devaluation that continued to weaken the pound led to a rise in the price of imports.

To put this into perspective, vegetable prices rose by 5.7% over the last year; coffee, tea and cocoa by 8.5%; and the price of meat by 3.9%. However, even with the rise in costs for some goods, general food prices are still 2.7% cheaper than in 2014.

Coupe insisted that Sainsbury’s and other notable supermarkets have done all in their power to ease the rising of prices, and have attempted to stay competitive with discounters such as Aldi and Lidl – the latter experiencing a growth in sales of 16% at the start of this year.

Sainsbury’s has struggled in recent months in its attempts to cut prices; as well as incorporating wage cost inflation and the consolidation of Argos, the popular catalogue retailer, into Sainsbury’s stores. Argos suffered a particularly weak Christmas period after the takeover, worth around £1.1 billion; most likely due to the removal of one hundred stores from Homebase since the takeover in 2016.

Coupe remains optimistic that the acquisition will be a positive investment in the long term, claiming that by next Christmas shoppers should benefit from the convenience of buying their groceries and gifts under one roof.

Consumer confidence in Britain has taken a blow, falling from 34% to 31% over the last year.  This is bad news for supermarkets, as almost 80% of British food imports come from member states of the EU.

Consumers and supermarkets alike could continue to pay the price after Brexit if the Prime Minister Theresa May cannot devise a trade agreement with the European Commission’s chief negotiator Michel Barnier. Thus far, shoppers have continued to suffer from a predicted 22% tariff on European food import prices going into 2018.

You can view Coupe’s full interview here.