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UK’s Sainsbury’s cuts more prices, adding to signs of abating inflation

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2023 06 26T095837Z 1 LYNXMPEJ5P0AK RTROPTP 4 SAINSBURY PRICES

UK’s Sainsbury’s cuts more prices, adding to signs of abating inflation

By James Davey and Sarah Young

LONDON (Reuters) -British supermarket Sainsbury’s cut more prices on Monday, adding to evidence that a surge in food inflation will moderate this year and provide some relief to consumers worn down by a cost of living crisis into its second year.

The UK’s second largest grocer after Tesco said it was investing a further 15 million pounds ($19 million) to reduce the price of staples such as rice, pasta and chicken breast fillets.

“We will continue to pass on savings as soon as we see the wholesale price of food fall,” said Rhian Bartlett, Sainsbury’s food commercial director.

Stubbornly high inflation has become a major political issue in Britain as it outstrips pay growth, while higher taxes and mortgage rates are also squeezing household budgets.

Prime Minister Rishi Sunak’s key economic pledge to halve overall inflation in 2023 before a probable 2024 election has been undermined by persistently high food inflation, which was running at 18.3% in May according to the most recent official data, and 16.5% in June, according to industry data.

Any signs that it could abate or even reverse in the coming months are being closely watched by the Bank of England, lawmakers and consumers.

Tesco, which earlier this month said Britain’s food inflation had peaked, Asda, Morrisons, Marks & Spencer and Waitrose have all announced price cuts or price freezes in recent weeks.

The supermarkets have, however, been criticised by some, including the Bank of England, for not being quick enough in passing on to consumers falls in global commodity prices – a charge they reject.

Governments across Europe are struggling with high inflation. Earlier this month, the French government secured a pledge from 75 top food companies to cut prices on hundreds of products. Hungary’s government has also imposed mandatory price cuts, while Sweden’s competition watchdog is probing possible profiteering.

While the UK government has raised concerns about the surge in food prices it is not considering imposing price caps.

Britain’s competition watchdog is examining grocery prices but has said that so far it has not seen evidence pointing to specific concerns.

Sainsbury’s Bartlett is one of several UK supermarket executives who will be questioned by lawmakers at a parliamentary committee on Tuesday.

($1 = 0.7852 pounds)

(Reporting by Sarah Young and James Davey; editing by Paul Sandle and Jason Neely)