Sainsbury’s warns war in the Middle East will hit shoppers

The boss of Sainsbury’s has called on the government to offer energy relief to help tame price rises as he warned the war could weigh on profits. 

Britain’s second-largest grocer has become the latest to warn the Iran war will hit both its customers and its profits.  

Chief executive Simon Roberts said it will have an ‘absolute focus on keeping prices low’ as the conflict adds pressure to the price of food. 

There have been warnings from the Food and Drink Federation that food inflation could hit up to 10 per cent by the end of the year.

Sainsbury’s said: ‘The conflict in the Middle East will impact both our customers and our business. The duration and extent of these impacts is very uncertain and this is reflected in our profit guidance.’

The war means it expects lower profits for its current financial year, with a range of between £975million and £1.01billion for total underlying operating profit.

Uncertain: Other retailers have warned that their outlook is hard to predict given the war

It said profits rose 1.1 per cent to £1.02bn in the year to 26 February, compared to the year before.

Roberts said that he has made the point to Government ministers in recent weeks that the food industry uses a lot of energy across manufacturing, processing and in shops.

He added: ‘And so we have made the point that anything we can do to bring down the cost of energy in the food system is going to help mitigate the impact of inflation.’

He said this would be a ‘key area’ where the Government could help to ‘keep down’ the pace of price rises.

‘It’s the high intensity industries that have had support already on this topic, we look and ask for that to include food and food manufacturing parts of industry.’

His remarks echo frustrated comments made by his peers in the supermarket sector. 

Marks & Spencer boss Stuart Machin said last month that it was ‘just not sustainable’ to heap extra costs onto firms’ bills to fund Government energy policies – from building nuclear power stations to maintaining the country’s power networks.

And Asda executive chairman Alan Leighton last month said ministers should ‘stand up and start doing stuff to help firms rather than giving them ‘more hurdles than the Grand National.’

This week, the chief executive of the FDF Karen Betts said the Government must ‘act now’ before higher costs become embedded in the food supply chain.

Firms are also grappling with a barrage of rising costs under Labour – from increased National Insurance and business rates bills to hikes in the minimum wage. 

Roberts’ remarks come just days after the boss of Tesco said it is ‘doing whatever we can’ to keep food prices down as the conflict creates ‘further uncertainty’ in its outlook for the year.  

He said that ‘people are watching every penny and every big weekly shop’ but that at the moment, the grocer hasn’t seen ‘issues with availability or meaningful changes in customer behaviour.’

But he said ‘we cannot predict the months ahead’, suggesting even more shoppers could start swapping dining out for eating in as well as buying more own-brand and frozen food.