Sainsbury's warns inflation.
Sainsbury's CEO warns of future supply chain inflation despite strong sales growth.
Sainsbury's CEO Simon Roberts has warned that more price rises are on the way, even as UK food inflation hit a recent low. The supermarket reported total retail sales of £9.15 billion for the 16 weeks to June 20 — up 2.7% year on year — with grocery sales climbing 3.6%, according to Sainsbury's. Despite the strong numbers, Roberts said: "There is pressure on inflation in the system" that has yet to fully arrive.
Sainsbury's shares rose 1.9% in early trading on the back of the results. But the upbeat market reaction masks a cautious outlook. Roberts stressed that while inflation is "not coming through as significantly as some had expected, it is still coming through," according to Bdaily.
Food Inflation at Low, But More Pain Ahead
UK food and non-alcoholic drink inflation fell to 2.2% in May 2026 — its lowest level since 2024 — according to the Office for National Statistics. That sounds like good news. But Roberts warned that supply chain costs are still rising and will take time to show up on shop shelves. The pressure is "still coming through," just more slowly than feared.
The Food Foundation pointed out that even at 2.2%, prices are still roughly 30% higher than they were in 2022. So "low" inflation is piling on top of an already painful price floor. For many families, the damage from the past few years has not gone away.
Middle East Conflict and Climate Drive Cost Surge
Two forces are pushing costs up inside the supply chain. First, the conflict in the Middle East has raised energy and transport costs. Tensions around the Strait of Hormuz — a key route for oil — have made shipping more expensive. Second, extreme weather in Southern Europe and West Africa has hurt crops like olive oil and cocoa, squeezing supply.
Bank of England policymaker Swati Dhingra warned on June 24 that "climate risks and geopolitical tensions" are creating hard-to-predict inflationary effects on food supply chains, according to the Bank of England. Roberts said Sainsbury's has signed long-term contracts with 2,500 farms to help protect against these wild price swings.
Grocery Boom Offset by Struggling General Merchandise
Sainsbury's grocery business is thriving. Online grocery sales surged 12.5% in the quarter, according to AskTraders. The supermarket credited its "Aldi Price Match" — the biggest in the market — and Nectar Price discounts for pulling shoppers away from discount rivals. A record-breaking June heatwave and the World Cup also boosted food and drink sales.
Not everything is going well, though. General merchandise and clothing fell 3.7% in the same period, with Tu clothing down 2.1% and Argos down 0.5%, according to Oxford Mail. Analysts at Bernstein called the overall results "encouraging," noting the Argos decline was "better than feared." Sainsbury's reaffirmed its full-year profit forecast of £975 million to £1.08 billion.
Lowest-Income Households Face Biggest Risk From Rebound
If supply chain pressure does push food inflation back up — some forecasts point to a possible rebound toward 4.4% by the end of Q3 2026, according to Trading Economics — poorer households will feel it most. Research linked to Sainsbury's and Comic Relief found that the lowest-income fifth of UK households would need to spend 85% of their disposable income just to afford a healthy diet.
Asda chair Allan Leighton has gone further than Roberts, calling food price rises "inevitable" and calling on the government to support farmers with energy costs, according to The Guardian. Roberts struck a more cautious tone — framing the situation as uncertain but manageable. The divide between retailers shows just how unclear the road ahead remains.
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