Ex-Sainsbury’s boss Justin King thinks the price of your weekly grocery shop is about to rise five per cent
Sainsbury's boss Justin King is one of those retail legends who, like former Tesco chief exec Sir Terry Leahy, had the foresight to get out just as things were about to get hairy.
Now King has used that foresight to suggest the price of your weekly shop could be about to leap.
In an appearance on Newsnight last night, King said supermarket prices are likely to rise by "at least" five per cent in the next six months.
He said the falling pound will cause "a profound change" for supermarkets – pointing out that 40 to 50 per cent of what we buy is sourced abroad.
"With the current exchange we could expect those things to be about 10 per cent more expensive, and if that's about half of what we buy, then that means something in the order of five per cent inflation."
Inflation inflating?
Inflation is currently at 0.9 per cent after a surprise fall in October – but it's expected to rise faster as falling sterling takes its toll.
In an interview on ITV's Peston on Sunday over the weekend, chancellor Philip Hammond said it was "clear that inflation is back" – although he added that it was "hopefully a temporary phenomenon as the effect of sterling's decline feeds through the economy".
Meanwhile, the National Institute for Economic and Social Research (NIESR) has suggested UK inflation will rise to four per cent by the end of 2017, slightly lower than King's expectations.
It then expects price growth to fall to the Bank of England's two per cent target by 2012.