Highlights

• UK households are struggling with the cost-of-living crisis due to a surge in food prices, and will keep rising for some time, Asda’s chairman Lord Rose said.
• Rose predicted that the food prices will rise higher as the Bank of England is expected to raise the interest rates by 0.25% this week.
• The grocery price inflation hit 5.9% in April, its fastest rise in 11 years as the number of items on promotion decreased at supermarkets.

UK households are struggling with the cost-of-living crisis due to a surge in food prices, and will stay high for some time, Asda’s chairman Lord Rose said. He added that the skyrocketing raw material costs and rising oil prices are going to hit a new permanent high level, and customers will feel the pinch as the hikes will be passed on to them. However, retailers said that to support households they will try to keep costs down.

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Rose predicted that the food prices will rise higher as the Bank of England is expected to raise the interest rates by 0.25% this week. The UK households are struggling with the rapid rise in energy, fuel, and food costs due to the resurgence of Covid in China and the war in Ukraine, which is, in turn, ramping up the raw materials costs for manufacturers and retailers.

Data from market research company Kantar show that the grocery price inflation hit 5.9% in April, its fastest rise in 11 years as the number of items on promotion decreased at supermarkets, adding an extra £271 to the amount average households will pay at the till this year.

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Due to supply chain problems caused by the war in Ukraine, UK supermarkets are also imposing limits on cooking oil a consumer can purchase.

Let us look at 3 FTSE-listed retail chains that are getting impacted by the sharply rising inflationary pressure.

1. Tesco Plc (LON: TSCO)

The multinational groceries retailer recently announced a reduction in prices as shoppers are increasingly turning to cheaper own-brand products. However, the supermarket chain has been criticised for its popular loyalty scheme, which has left some shoppers paying more for certain products. The company has launched a campaign to highlight value hacks to help shoppers to save more money during surging inflation.

With a market cap of £20,730.16 million, the FTSE 100-listed company’s share value appreciated by 23.76% over the last one year as of 3 May 2022, while its year-to-date return stands at -5.66. Tesco Plc’s shares were trading at GBX 273.60, up by 0.59% at 8:20 AM (GMT), as of 3 May 2022.

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2. J Sainsbury Plc (LON: SBRY)

J Sainsbury Plc reported that the profit may fall this year as normal shopping habits return following the end of lockdowns and as shoppers feel squeezed by the rising inflation. It has been predicted underlying profit before tax could fall from £730 million in the last 12 months to between £630 million and £690 million. Recently, the supermarket chain pledged to lower the prices of its fresh products.

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With a market cap of £5,451.38 million, the FTSE 100-listed company’s share slumped by -0.52% in the last one year as of 3 May 2022, while its year-to-date return stands at -14.20%. J Sainsbury Plc’s shares were trading at GBX 236.20, up by 1.24% at 8:20 AM (GMT), as of 3 May 2022.

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3. Greggs Plc (LON: GRG)

Leading UK food-on-the-go retailer Greggs Plc specialises in savory products such as sandwiches, bakes, sausage rolls, and sweet items. The company reported a 5.3% increase in total sales in 2019 level to £1,229.7 million and its pre-tax profit stood at £145.6 million, up from the loss of £13.7 million.

With a market cap of £2,394.69 million, the FTSE 250-listed company’s share value dipped by -0.85% over the last one year as of 3 May 2022, while its year-to-date return stands at -29.88%. Greggs Plc’s shares were trading at GBX 2,338.00, down by 0.51% at 8:20 AM (GMT), as of 3 May 2022.

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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.