Ocado Boss Claims Worst Of Food Inflation Is Over

The UK is "definitely over the worst" of food price inflation, the boss of online food retailer Ocado has said.

Chief executive Tim Steiner gave his forecast as separate figures revealed that grocery price growth slowed for a fourth month in June.

Market researcher Kantar said prices rose by 14.9% in the four weeks to 9 July compared with a year ago.

But Kantar said inflation remains "incredibly high" and Mr Steiner said customers were spending less.

Kantar said Britons had been turning to supermarket promotions to save money, which had helped to slow the pace of price rises from 16.5% in May.

Food prices are one of the biggest contributors to the UK's overall rate of inflation which remains stubbornly high.

New figures, due on Wednesday, are expected to show that the overall pace of price rises slowed to 8.2% in June, from 8.7% in May.

However, the Bank of England is expected to continue raising interest rates, which it has been using as a tool to curb rising prices and to bring inflation down back to its 2% target.

The increase in the cost of the weekly food shop has been hitting households hard. The Bank has previously warned it has taken longer than expected for declines in wholesale costs to filter through to supermarket shelves.

Fraser McKevitt, head of retail and consumer insight at Kantar, said grocery price inflation had been falling for four months in row, which would come as "good news for many households although, of course, the rate is still incredibly high".

But he cautioned that prices were rising quickly last summer, so the latest slowdown is "partially down to current figures being compared with those higher rates one year ago".

The prices of basics such as pasta, eggs and cheese have rocketed since last year as food producers struggled with supply chains issues and soaring energy bills.

However, these pressures appear to be easing while Kantar said UK shoppers had dramatically changed their behaviours to cut costs "whether by trading down to cheaper products or visiting different grocers".

The research firm said spending on promotions now accounts for just over a quarter of all UK grocery spending.

Meanwhile, retailers are "ramping up" loyalty card deals such as Tesco's Clubcard Prices and Sainsbury's Nectar Prices.

Kantar said that at the current level of inflation, households would have spent £683 more on their annual grocery bill if they had bought the same products they did last year.

However, by seeking out cheaper deals and retailers, customers had limited this rise to just £330, "well below the hypothetical £683", said Kantar.

According to official figures, food price inflation, which is the rate at which prices for groceries have risen compared to the year before, was 18.3% in May, down slightly from 19% in April. That is close to its highest rate in nearly 45 years.

Supermarkets have been accused of not passing on falling wholesale costs to consumers, prompting the competition watchdog to launch a probe.

However, grocers deny profiteering and have cut the price of some basics like milk.

In its latest results for the six months to 28 May, Ocado said its retail revenues rose by 5% to £1.2bn in part due to average price inflation of 8.4% across the business.

However, it said this had been offset by smaller basket sizes and fewer orders per week as shoppers looked to cut costs.

Meanwhile, Kantar said competition between the UK's grocery chains remains intense.

Aldi was again the fastest growing supermarket in June, with sales up by 24% compared with a year ago, followed closely by budget rival Lidl on 22.3%.

Sainsbury's is seeing the fastest growth of the bigger supermarkets, with sales up 10.7% year on year, followed by Asda at 10.5% and Tesco on 10.2%.

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