The chairman of Tesco, John Allan, has warned that the “worst is yet to come” ahead of a potential 5% increase in the coming months.
The comments come as the UK faces a rise in national insurance, alongside, surging energy prices, which will see a fuel bills rocket from April 2022.
The chairman of the Big 4 grocer flagged that food prices at Tesco increased by only 1% in the last quarter but could rise by 5% in the coming months.
Speaking to BBC’s Sunday Morning programme, he said: “Food is a relatively small part of household spending, it’s only about 9%, that figure has halved in the last half century.
“But of course, it’s a bigger proportion for those on the lowest incomes. So I think we’re concerned particularly about what can we do to try to protect those who are hardest up, who are going to suffer most from that?”
“In some ways, the worst is still to come because although food price inflation in Tesco over the last quarter was only 1%, we are impacted by rising energy prices; our suppliers are impacted by rising energy prices”, he added.
“So the likelihood is that that inflation trigger will rise but we’re doing all we can to offset it.”
According to the governor of the Bank of England, Andrew Bailey, inflation could hit 7.25% by April and is unlikely to fall back to normal levels for two years.
As a result, the bank raised interest rates to 0.5% on Thursday with further rises expected. It comes as the government said it has not ruled out stepping in with more support if energy bills rise again as expected in October.
Allan continued: “I predicted last autumn that food prices by the spring might be rising about 5%.
“I sincerely believe that it’s not going to be any more than that, it might even be slightly less, but that’s the sort of number we’re talking about. But of course 5%, if you’re spending – as some of the least well-off families are spending – 15% of your household income, is significant.
“It troubles us and I’m sure troubles many people that people may have to struggle to choose between heating their homes and feeding their families and that’s clearly not a situation that any of us should tolerate.”
He added that fuel prices are “unlikely to come down very quickly”.
He concluded: “There has been a huge surge in fuel prices in the last year. And I think our hope is that they will now stabilised and ultimately come down but they’re unlikely to come down very quickly, I think.”