The head of the largest supermarket chain in the United Kingdom has warned that “the most threatening is yet to arrive” regarding food price inflation, predicting that it would soon reach 5 percent.
During an interview with the BBC’s Sunday Morning show, John Allan, the chairman of Tesco since 2015, said he was fully aware that families on extremely low budgets were forced to pick between food and warmth. He described the notion that this was taking place as “extremely worrisome.”
Overall inflation is presently at 5.4 percent, which is a 30-year high and is expected to reach 6 percent in the spring, just one component of the cost of living issue that UK people are experiencing. Poverty organizations have warned about the looming danger to individuals with the lowest incomes.
“It’s possible that the worst is yet to come – since, even food cost inflation at Tesco was simply 1 percent in the third quarter of 2018, growing energy costs are hitting us.”
The rising cost of electricity affects our suppliers. We’re doing all we can to mitigate the situation, but that’s the kind of figure we’re talking about. Naturally, he said that 5 percent was acceptable.
Allan acknowledged that some people would “of course” have less money to spend on luxuries as a result of the price hikes, which coincide with a rise in national insurance contributions and a £693 raise in the moderate family’s yearly energy bill, which will bring it to £1,971, both of which will take outcome in April, as well as a rise in national insurance contributions.
However, he said that grocery stores and suppliers were not exempt from growing energy prices. According to a survey released this week by the British Retail Consortium, food inflation increased to 2.7 percent in January, up from 2.4 percent in the preceding month.
Rising costs prompted the Bank of England to increase interest rates to 0.5 percent on Thursday, the same day that the government announced a hike in energy bills, and the chancellor announced a package of assistance for those in need.
In his words, “I believe that the combination of rising energy costs, the effect of national insurance rises on people’s earnings, and, to a much lesser degree, rising food prices, would squeeze the most vulnerable even more severely.”
Additionally, the former CBI head defended Tesco against charges made by food poverty campaigner Jack Monroe that the prices of essential commodities were growing at a quicker rate than the prices of other items.
Allan could not speak for the rest of the business, but he said this was not true at Tesco. “Price increases are dependent on the specific product. Coffee prices are rising, while other items, such as the cheapest can of baked beans at Tesco, are less expensive than they were five years ago,” he said.
Tesco reported in January that its Christmas sales were good and that it expects to earn earnings of £2.6 billion, which is better than the company’s earlier projection.