Former Sainsbury’s CEO Justin King has said the UK’s “golden era” of cheap food has come to an end as high grocery bills continue to climb.
Despite Tesco and Sainsbury’s reporting tripled and double profits, King has claimed that supermarkets can’t absorb extra costs entirely or protect consumers from price hikes.
“The headline profit numbers are of course, large in the context of any household budget,” King told BBC Radio 4’s Today programme.
“But the margins in supermarkets are around 3%. So even if supermarkets made no profits at all, they wouldn’t really be able to make a huge dent in the cost inflation that is coming through the system.”
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The news comes as food CPI has reached 5.9%, the highest since December 2011.
Last week, the Bank of England also said inflation was likely to exceed 10%, the highest since 1982.
“We have been perhaps through a golden era. We spend much less as a proportion on average of our household budgets on food than we had almost any time in history, and that’s been [on] a long, gentle decline,” King explained.
“So I suspect what we will see is a higher proportion, across the piece, spent on food for the longer term. It won’t actually be that high in historical terms but it will require adjustments in terms of how we all prioritise our family budget spending.”
However, King added that the government played a role in ensuring that low-income families could cover rising food bills.
The former Sainsbury’s boss highlighted the £20 Universal Credit uplift during Covid, and said he would be “very supportive” in re-instating that approach.
“For most of us, we can make choices about how much of our household budget is on food … but for some, of course, those choices don’t exist. That’s why the benefit system has to exist,” King added.
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