Supermarket Morrisons to report a lift from inflation

 
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Morrisons Launches Price Match  Scheme
Morrisons has fought hard in the price war (Source: Getty)

Morrisons the fourth-biggest grocer in Britain, will update investors this week about the effect of price inflation on its quarterly sales ahead of the crucial Christmas rush.

Supermarkets have battled to keep customers through a bruising price war over the past three years but have recently started to lift prices, passing on a surge in costs.

Morrisons is expected to tell the market on Thursday that its recovering sales in the past three months have depended partly on the rise in inflation.

“We expect a fourth consecutive quarter of LFL [like for like] sales growth exceeding two per cent, which would be a creditable performance given a somewhat more robust Asda and continuing strength from the discounters - though of course food inflation will likely have helped,” said analysts at Barclays.

The cost of food and non-alcoholic beverages rose 3.1 per cent in September, the highest rate since October 2013, according to the latest official figures.

For the full year, analysts are expecting Morrisons’ like-for-like sales to grow 2.6 per cent, taking underlying pre-tax profits up 10 per cent to £371m.

Read more: Morrisons confident about future growth as it raises profit expectations

The group returned to profit in 2016 after a restructuring led by David Potts, which saw several hundred job cuts and the sale of its smaller outlets under the M Local brand.

The supermarket has lost some of its customers recently to the fast-growing discounters. Figures from Kantar this month showed that Lidl is the country’s fastest-growing supermarket, gaining ground while all of the big four lost market share over the past year.

Kantar also found that festive offerings have already begun, with £69m-worth of Christmas chocolate boxes sold in the four weeks to 8 October.

Sainsbury’s will issue its own interim results on 9 November.

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