Life tough for millions of households, says Sainsbury's boss

Shoppers are "watching every penny and every pound", the boss of Sainsbury's has warned, as the supermarket revealed its profits had been hit by the rising cost of living.

Simon Roberts said the grocer got "how tough it is for millions of households" and was trying to keep prices low.

Food prices are rising at their fastest rate in 42 years as the cost-of-living crisis squeezes household budgets.

People are also struggling with higher energy bills and rising interest rates.

Sainsbury's said sales across the business had climbed 4.4% to £16.4bn in the six months ending in September.

But the UK's second-largest supermarket also revealed a dip in profits as the business absorbed some of the impact of rising food costs and put up wages.

The company, which also owns Argos, said underlying pre-tax profit declined by 8% to £340m compared with the same period last year.

Mr Roberts said: "We will have invested more than £500m by March 2023 in keeping prices lower by cutting our costs... meaning we have more firepower to battle inflation."

The grocer's profits also reflect a return to normal shopping habits since the pandemic lockdowns ended.

The price of pasta, tea, chips and cooking oil has soared, according to official data, with vegetable oil going up by 65% in a year.

Overall, the price of budget food in supermarkets rose by 17% in the year to September, the Office for National Statistics (ONS) said.

Experts say the rise in the cost of groceries has been accelerated by the war in Ukraine, which has disrupted grain, oil and fertiliser supplies from the region.

Food and drink prices have also been affected by the recent weakness in the pound, which has made imported products and ingredients more expensive.

Earlier this month, a BBC survey uncovered growing concern about the squeeze on finances. Some 85% of those asked are now worried about the rising cost of living, up from 69% in a similar poll in January.

Like other supermarkets, Sainsbury's has given its staff two pay rises this year to "reflect the current challenges households are facing".

Sainsbury's and Argos hourly retail staff saw their pay rise from £10.00 to £10.25 an hour, and from £11.05 to £11.30 an hour in London.

The grocer has said profits for the current year are set to decline as it chooses to invest more into its pricing and pay improvements for workers.

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said Sainsbury's, like its peers, was "stuck between a rock and a hard place" as it faced increasing labour costs and the impact of high inflation.

"Sales have remained robust, but the effects of the macro-economic situation are beginning to filter through into profitability," she said.

Despite this Sainsbury's said it was "well placed" for the Christmas trading period, and to deal with further cost-of-living pressures into next year.

The group is halfway through a £1.3bn cost-saving programme, which has seen it shut down in-store restaurants and standalone Argos shops.

It said it expected to close about 50 Argos stores this year as part of the previously announced plans, with around 25 Argos sites set to open within larger Sainsbury's shops.