Sainsbury’s said food inflation is “starting to fall” as the supermarket group saw sales boosted by bank holidays and warmer weather.
The UK’s second largest grocery chain also said sales volumes returned to growth last year, with shoppers buying more items despite the intense pressure on rampant food and drink inflation.
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%.
We’ve published our Q1 results for the 16 weeks to 24 June 2023. Our investment in value, innovation, service and availability is driving a return to volume growth and strengthening market share outperformance https://t.co/2NrJErwiC2 pic.twitter.com/5XA70EP4U3
— Sainsbury's News (@SainsburysNews) July 4, 2023
Sainsbury’s chief executive Simon Roberts said the chain has seen its own prices at “less than half the headline rate” of food inflation.
He added that 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 that total retail sales excluding fuel increased by 9.8% over the 16 weeks to June 24, compared with the same period a year earlier.
Sainsbury’s said grocery sales jumped by 11% 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.”
Sainsbury’s revealed that its general merchandise business, which sells products such as technology and white goods, saw sales rise 4%, driven by a 5.1% jump at its Argos operation.
The update from Sainsbury’s also came a day after the Competition and Markets Authority (CMA) said drivers paid nearly £1 billion more for fuel at supermarkets last year due to increased margins.
The watchdog reported an estimated combined additional cost of “around £900 million” for customers of Asda, Tesco, Sainsbury’s and Morrisons.
Mr Roberts said he welcomed proposals by the CMA aimed at improving transparency in fuel prices.
“As we said at the Business Committee, we are very positive about the suggestion about having to provide up-to-date transparent pricing,” he said.
“We will always be the cheapest or second cheapest for fuel in any location.”
AJ Bell investment director Russ Mould said: “If the overall value of a supermarket’s sales were not going up at a time of rampant food inflation something would be seriously wrong, but what’s more telling in the latest update from Sainsbury’s is news of an increase in volumes.
“Under Simon Roberts, who took over the business a little more than three years ago, there has been a renewed focus on its core food retail operation and this seems to be paying off.
“The market positioning of Sainsbury’s means it could be taking some business away from the more premium-priced Waitrose and Marks & Spencer, helping to compensate for any market share lost to the German discounters Aldi and Lidl.”
Sainsbury’s shares were 2% lower on Tuesday.
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