Food inflation is ‘starting to fall’, says Sainsbury’s as sales are boosted by bank holidays and warmer weather

Latest official figures from the Office for National Statistics (ONS) show food inflation eased slightly in May but remained at a stubbornly high 18.4 per cent.

Sainsbury’s chief executive Simon Roberts said price rises are now stalling, with prices on the retailer’s 100 most popular products falling over the latest quarter.

Products like bread, butter, milk, pasta and chicken have seen price cuts in recent months as falls in costs further down the supply chain pass through to customers.

Nevertheless, it comes amid an ongoing investigation by the UK’s competition watchdog into accusations supermarkets are profiteering from higher prices and whether wholesale price reductions are appearing on shelves quickly enough.

On Tuesday, Sainsbury’s posted a sharper jump in grocery sales over the past quarter as shopper demand grew.

It revealed total retail sales excluding fuel increased by 9.8 per cent over the 16 weeks to June 24, compared with the same period a year earlier.

Sainsbury’s said grocery sales jumped by 11 per cent as the volumes bought by shoppers returned to growth, driven by a “particularly strong performance over bank holidays and warmer weather towards the end of the quarter”.

Mr Roberts said: “We are putting all of our energy and focus into battling inflation so that customers get the very best prices when they shop with us, particularly now as household budgets are under more pressure than ever.

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

“Customers are choosing us when they want to celebrate and we grew ahead of the market over Easter, the coronation and the bank holidays.”

Richard Hunter, Head of Markets at interactive investor, commented: “Sainsbury’s increasing focus on value is reaping some rewards, particularly during the key events over this period.

"Previously having reported a very successful Christmas period, Sainsbury has now seen the benefits of Easter, the coronation and several Bank Holidays, where its ranges are appealing to an ever increasingly cost-conscious consumer.

"In particular, the group has returned to basics with significant focus on the grocery business, where it has continued to invest in lowering prices, including the ongoing Aldi Price Match campaign.

"At a headline level, Sainsbury is maintaining its guidance for full-year underlying pre-tax profit of between £640m and £700m, which was expected given that it would be unusual to be upping its outlook at this early stage.

Mr Hunter added: “In the meantime, the dividend yield of 4.8 per cent provides an attraction to income-seeking investors, and is comfortably covered from earnings.”