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Morrisons Warns: Food Inflation Set to Climb
21 Jan
Summary
- Food inflation rose to 4.5% in the year to December.
- Basket sizes have shrunk, with consumers seeking deals.
- Morrisons experienced a £200m hit from higher costs.
Morrisons' chief executive, Rami Baitieh, has forecast an increase in food inflation over the upcoming months. This projection comes as consumers grapple with persistent inflation, diminished confidence, and budget uncertainties, leading to smaller shopping baskets. In the year up to December, food and soft drink prices saw a 4.5% rise.
Morrisons has responded to the competitive grocery market by implementing price cuts, including 2,500 reductions at the start of January. The supermarket reported a 3.4% sales growth in the six weeks ending January 4, boosted by a 17.6% increase in its premium ready meal range.
The company has navigated a challenging year, incurring a £200 million cost increase from higher wages, National Insurance, and packaging levies. This, coupled with a cyber attack and higher-than-expected inflation, contributed to flat earnings of £835 million for the year ending October 26.
