Tesco chairman John Allan issued a stark warning on rising food prices yesterday, cautioning “the worst is yet to come” in the coming months.
While the supermarket boss said it was troubling people were facing heating or eating, Allan said Tesco had also been hit with soaring energy costs.
The average amount of household income spent on groceries was about nine per cent last year, but could rise to 15 per cent by the spring, he told the BBC’s Sunday Morning.
The country’s largest supermarket was “doing all we can” to offset rising inflation, he said.
Households face skyrocketing energy costs from April. The well-respected Allan pointed to impending increases in national insurance taxation as also contributing to a household finances crunch.
The Conservatives remain under fire for hiking taxes in the midst of an inflationary surge, but show no sign of u-turning on the April increase.
Shop price annual inflation surged to 1.5 per cent last month, the highest rate of inflation since December 2012, data from the British Retail Consortium (BRC) found.
It comes as spiralling bills pushed consumer confidence down one percentage point at the end of last year, to minus 11 per cent, according to the latest Deloitte Consumer Tracker released overnight.
Consumers suggested they would delay holidays and socialising occasions, despite pent-up demand as Covid restrictions ease.
Those surveyed by Deloitte signalled their intended spending on discretionary items would fall by nine percentage points in the first quarter of 2022.
Cost increases for utilities and groceries saw 41 per cent of consumers’ personal expenditure increase, up from 36 per cent in the previous quarter.
Household disposable income sentiment fell five percentage points, to minus 26 per cent; nine percentage points lower than the fourth quarter of 2020.
The data comes as average household energy bills were upped by £693 to an eye-watering £1,971 per year, after regulator Ofgem updated its consumer price cap last week.
Céline Fenech, consumer insights lead at Deloitte, said: “With the expected squeeze on spending power and higher inflation, another fall in confidence may dent the hopes of a consumer recovery. However, some consumers are still in the fortunate position of having higher levels of savings compared to before the pandemic, indicating some financial resilience.
“The further easing of restrictions should also support an improvement in sentiment, in turn boosting spending. However, this may not occur until inflation has peaked so the critical question in the meantime is whether consumers can afford to continue spending.”
Hospitality bosses have also echoed warnings of price rises, with one industry survey finding that nearly half of operators will be forced to hike prices more than 10 per cent this year.
Some 15 per cent of hospitality businesses warned they were anticipating hikes of more than 20 per cent in the year ahead, a survey from trade body UKHospitality warned.
It comes after retail and hospitality firms faced a disappointing festive period, amid the emergence of the Omicron Covid variant and related restrictions at the end of last year.