- Food prices in the UK have soared amid supply chain disruptions due to the Russia-Ukraine conflict.
- As per research, basic commodities in the country now cost 11% more in comparison to March 2021.
- Grocery prices in February witnessed the fastest rise in over eight years.
UK households have been hit by soaring food prices as supply chain disruptions due to the Russia-Ukraine conflict have limited the availability of essential commodities. The country saw the highest inflation rates in three decades after the Office for National Statistics (ONS) reported a 0.8% hike in the consumer price index (CPI) for March, taking it to 7.0% from 6.2% in February. The prices for food and non-alcoholic beverages climbed by 5.9% in the year to March 2022, the highest yearly rate in over a decade.
On Thursday, Swiss consumer goods group Nestlé said it had hiked its prices by 5.2% in the first three months of this year and another increase is likely to follow due to rising production costs. These rising costs are passed on to consumers, who return to stores and find that their favourite products cost more week after week. This rampant food price inflation has forced retail analysts to coin a new term, shelf shock.
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Notably, Ukraine, the largest producer of sunflower oil, is unable to meet the demands, leading to fears among retailers that their stocks of the cupboard staple may deplete soon. This has not only raised the price of alternatives but also has a knock-off effect on the prices of snacks that use cooking oil, from biscuits, crisps, and ready meals to long-life ice cream. Earlier this month, supermarkets Morrisons and Waitrose began rationing cooking oil, limiting the quantity to two bottles per customer over fears of a shortage.
As per retail research firm Assosia, basic commodities in the country now cost 11% more in comparison to March 2021, with items like milk, instant coffee, and basic pasta witnessing double-digit hikes. Wheat is now priced 39% more than what it was a year ago, data from the Agriculture and Horticulture Development Board shows. Besides, reports citing market experts have claimed that grocery prices in February witnessed the fastest rise in more than eight years.
Here is a list of some supermarket stocks and how they have been faring amid the rising inflation.
Tesco Plc (LON: TSCO)
Tesco is the UK's largest supermarket chain with a share of over 27% of the country's grocery market. Last week, the company reported a sharp rise in annual gains in the year to 26 February 2022. However, it warned of a drop in its profits for the year 2022-23 due to an expected change in consumer behaviour, cost inflation, and competitive pricing.
Tesco’s shares were trading at GBX 266.90, up by 0.68% on 22 April 2022 at 10:31 AM GMT+1. The company’s market cap stood at £20,214.10 million, and its one-year return is 17.39% as of 22 April 2022.
J Sainsbury Plc (LON: SBRY)
The UK's second-largest chain of supermarkets has more than 600 supermarkets and 800 convenience stores across the country. Recently, it entered the list of companies to opt to join the Real Living Age, which means that it will commit to paying its employees £11.05 an hour in London and £9.90 outside the city.
The FTSE 100-listed company has a market capitalisation of £5,668.69 million and its shares were trading at GBX 245.20, up 1.07%, at 10:34 am GMT+1 on 24 April 2022.
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OCADO Group Plc (LON: OCDO)
Ocado Retail Ltd is a UK-based online grocery retailer. It is a joint venture between Ocado Group and Marks & Spencer Group. The company reported a 5.7% fall in revenue in the first quarter to 27 February 2022.
As of 22 April 2022, the company's market capitalisation stood at £8,193.78 million and its share price has depreciated by 51.8% over the past year. Shares of the company were trading 2.43% down at GBX 1,063.50 at 10:35 am GMT+1 on Friday.
Marks and Spencer Plc (LON: MKS)
The London-headquartered retailer operates in several countries and offers food, home, and clothing products. Last month, the company announced that Stuart Machin will become its new Chief Executive and succeed Steve Rowe to lead the day-to-day operations of the business.
The FTSE 250-listed company has a market cap of £3,031.41 million and its share price has plunged by 2.04% over the last one year as of 22 April 2022.
Marks and Spencer Plc’s shares were trading at GBX 152.65, down 1.36%, at 10:39 am GMT+1 on 22 April 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.