The boss of Sainsbury’s has said there is inflationary “pressure” still to come through the supply chain amid uncertainty over how the Middle East conflict will hit shoppers.
The supermarket giant said trading was “encouraging” in recent months but highlighted that there was nevertheless some caution among shoppers.
Simon Roberts, chief executive of the retailer, said inflation is “coming through” but stressed that it is set to be below some recent forecasts.
He said: “It’s encouraging to see some of the industry trade bodies reducing some of their forecasts but there is still uncertainty over how inflation will grow.
“There is pressure on inflation in the system.
“We’ve previously said that it would take until into the summer to see the level at which inflation would come through.
“It’s not coming through as significantly as some had expected but it is still coming through.”
Sainsbury’s said its grocery inflation is lower in the most recent quarter compared to the previous period.
The Office for National Statistics most recently reported that food and non-alcoholic drink inflation hit 2.2% in May, representing its lowest level since 2024.
The UK’s second-largest supermarket chain has been buoyed by stronger growth in its core grocery business, while general merchandise – which includes clothing brand Tu – and its Argos business both reported declines.
It revealed that total retail sales, excluding fuel, grew by 2.7% to £9.15 billion in the 16 weeks to June 20, compared with the same period a year earlier.
Sales of the Sainsbury’s brand grew 3.1% to £8.04 billion over the quarter, with grocery sales up 3.6% year on year.
Bosses suggested the firm had recorded growth on the back of investment into value, such as through its Aldi price match and Nectar price discounts.
Nevertheless, grocery growth was partly offset by a 3.7% sales fall in its general merchandise and clothing business.
This included a 2.1% decline in its Tu clothing arm in the face of tough comparisons with a year earlier, while general merchandise – which includes homeware, technology and other items – sales slid 6.3%.
The group said sales at its Argos business dipped 0.5% as positive volume growth was “offset by the impact of subdued consumer spending on average selling price”.
Mr Roberts said: “Customers are looking for value now more than ever. We are consistently delivering outstanding quality at great value, so more people are choosing Sainsbury’s for their big weekly shop.
“This has driven an encouraging start to the year with continued volume growth and market outperformance.
“With the World Cup in full swing and an exciting summer of sport ahead, I want to say a huge thank you to all our Sainsbury’s and Argos colleagues and our farmers and suppliers for showing up so well for our customers every day.”
Sainsbury’s shares were up 1.9% in early trading.
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