M&S boss Archie Norman has warned that food prices could soar by up to 10% this year, with the “crunch time” for many families coming after the summer holidays when they find “there is nothing left in the kitty”.
Chairman of the retail giant, Norman – who is also a former Tory MP – spoke to BBC Radio 4’s Today programme on Tuesday.
He made it clear that inflation would mean that food prices would continue to rise and in doing so, continue to squeeze many household budgets.
“Global prices are rising, it’s not to do with UK food so much as the effect of freight costs, wheat prices, oil and energy prices go into almost everything,” he said.
“As a consequence, all food retailers in the UK are – because we operate on very thin margins – we are reluctantly going to have to allow some food price inflation to run through the system.”
He added: “It would not be surprising to see food price inflation over the course of the year running towards 8 to 10% but we don’t know that yet.
“It runs through the year, some has gone through now but there is quite a lot still to come.”
The Bank of England has also predicted inflation could soar into double digits later this year, meaning the full effect of the cost-of-living crisis is yet to be seen.
Norman agreed with this, saying: “At the moment, UK spending is pretty good because customers still have quite a lot of stored up savings.
“The crunch is not going to be now. “The crunch is going to be in the autumn when people come back from their holidays, they have spent their money, and there is nothing left in the kitty.”
Normal also stressed that he believes “most of this inflation is probably transitory”, and expects the worst of it to be over within a year.
“Before we do anything too drastic, we need to recognise the nature of the problem we are dealing with is a serious one but it’s probably a 12-month problem not a 36-month problem.”