Shoppers will not see food prices rise until at least the summer and Easter will be unaffected by conflict in the Middle East, the boss of Sainsbury’s has said, despite fears of an inflation spike.
Simon Roberts said it was “too early” to say whether and when food price inflation related to higher commodity costs would hit supermarket shelves and that the UK’s second-largest supermarket had long-term agreements with suppliers to help protect shoppers.
“We have a lot of the tools to make sure we’ll do everything possible to contain the impact on inflation,” he said. “Obviously we are watching and monitoring events closely.
“We’re not looking at immediate consequences or near-term consequences that we don’t think we’ve got a plan to navigate.”
Farmers across the world are facing rising costs, as the closure of the strait of Hormuz affects about a third of the global seaborne trade in fertilisers. “Volatility and uncertainty for farmers has only become a bigger issue for them. They need certainty on making sure they can see what’s coming,” Roberts said.
Speaking from a fruit farm in Kent, where Sainsbury’s has signed a new five-year deal with a berry producer as part of a plan to invest £5bn in longer-term contracts, Roberts added that the effects of the war were unlikely to hit food prices until the summer at the earliest as, for example, many farmers had bought fertiliser and fuel before the disruption and many businesses had hedged commodity costs.
He said the impact would become clearer in three to five weeks and was helped by the British growing season getting under way, meaning food imports will be lower until the autumn. Any impact on price would be linked to “how long this situation may or may not [continue]” and “what happens ultimately to the cost of oil”, Roberts said.
“It’s not going to be in the Easter shopping basket, but I can’t say by the summer that will be the case,” he added.
Roberts called on the government to ease planning restrictions to help expand UK food production in an increasingly volatile world affected by the climate crisis and geopolitical disruption.
He said he believed the government wanted to ease the way for developments such as polytunnels and poultry facilities to help farmers produce more, as well as extend the harvest season. “We want to grow and produce more at home,” said Roberts, who is expected to be among retailers meeting with the chancellor, Rachel Reeves, this week to discuss the effects of the Iran conflict.
Sainsbury’s said that by the end of this year, 60% of its own-brand suppliers of fresh produce including mushrooms and carrots, dairy, meat, fish and poultry – 2,500 farms – would have agreements covering five or more years. Berry farmers are the latest group to join the scheme, with apple and pear producers expected to follow soon.
Simon Roberts, the boss of Sainsbury’s (left), with Tim Chambers on his fruit farm, which grows produce more efficiently in polytunnels for the supermarket chain. Photograph: Andy Hall/The GuardianRoberts said the supermarket chain had become adept at dealing with volatile trading conditions after more than five years of significant disruption, ranging from Brexit to the Covid pandemic, as well as a surge in commodity prices after Russia’s full-scale invasion of Ukraine in 2022.
He said Sainsbury’s had committed to more long-term contracts after several years of supply issues on fresh produce including tomatoes caused by extreme weather in Spain.
Roberts’ comments contrast with those of Allan Leighton, the chair of the struggling rival supermarket Asda, who suggested UK food price inflation was inevitable given the impact of fuel and energy costs on producers.
Food inflation eased slightly to 3.4% in March from 3.5% in February, according to the British Retail Consortium (BRC). Analysts at Shore Capital forecasted on Monday that it would remain as high as 3% by the end of the year.
Helen Dickinson, the chief executive of the BRC, said: “Higher costs resulting from the conflict in the Middle East are starting to feed into supply chains. While retailers will work with their suppliers to mitigate the impact on prices as far as possible, inflation will rise, although there are no indications it will reach the peaks of the last spike in April 2023.”
Leighton called on the government to provide short-term financial support for farmers hit by energy and fertiliser cost increases linked to the Middle East crisis.
Roberts agreed, saying: “We need to pay really close attention to what’s happening now.” But he added it was important not to focus on short-term solutions and to “work in a strategic way to drive the strong food system” the country needed.
He said the retailer’s cost-of-production-based longer deals guaranteed farmers a price that reacted to changes in the cost of fuel, fertiliser and animal feed. They also meant a closer relationship between supplier and supermarket so that, for example, an unexpected drop or rise in production could be managed.
“If we didn’t have these long-term partnerships in place we would be more concerned. It gives us certainty to navigate our way through,” he said.
Roberts was speaking at the Kent fruit farm of Tim Chambers, who has been investing in technology such as solar power, heated polytunnels and robotic equipment to tackle pests, assess crop ripeness and carry picking crates to help improve worker efficiency.
Chambers said he had been confident to make the investments – which increase the length of harvest, reduce waste and reliance on volatile commodities such as fuel and chemicals – because of his five-year deal with Sainsbury’s. “You can’t make big investments and decisions on uncertainty,” he added.
Roberts said Sainsbury’s longer-term commitments were “joining the dots up across the supply chain, giving farmers certainty and making sure investments are happening in the right place”.
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