Sainsbury’s is set to give investors a fresh read on shopper sentiment and food price pressures when it publishes its first quarter trading update tomorrow.

The supermarket is expected to report further grocery growth after saying in April that it had made a “positive start” to its new financial year, with grocery volumes growing ahead of the wider UK market.

However, the update comes as investors look for clearer signs of how households are responding to renewed pressure on fuel, energy and food costs following the conflict in the Middle East.

Tesco last week said shopper sentiment had been hit by the war, although chief executive Ken Murphy stressed that the impact had not yet fed through into higher prices.

Sainsbury’s is likely to face similar questions, particularly around whether it can keep driving grocery volumes while holding prices down in a fiercely competitive market.

The latest ONS figures showed food and non-alcoholic drink inflation easing to 2.2 per cent in May, down from 3 per cent in April and its lowest level since December 2024.

However, transport inflation rose sharply, with motor fuel prices up 24.6 per cent year on year in May, adding pressure to household budgets.

Sainsbury’s has continued to lean heavily into value and food-led growth under its Next Level strategy. In April, the grocer reported full-year grocery sales growth of 5.2 per cent, supported by volume growth and market share gains.

Sainsbury’s has also pledged to keep prices low while investing more than £5bn into British and Irish farming over the coming years.

However, its Argos business remains a potential drag on performance as the general merchandise market stays subdued.

Hargreaves Lansdown equity analyst Aarin Chiekrie said Sainsbury’s was “executing well” on its food-first strategy, but warned that its exposure to general merchandise through Argos could hold back progress.

Sainsbury’s guided in April that it expected total underlying operating profit of between £975m and £1.075bn for the 2026/27 financial year, reflecting uncertainty around the impact of the Middle East conflict on both customers and the business.

The supermarket’s update will be watched closely for any change to that guidance, as well as signs of whether its grocery momentum is strong enough to offset weaker discretionary spending.

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