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Sainsbury’s and Unilever deny claims of profiteering in cost of living crisis Sainsbury’s and Unilever deny claims of profiteering in cost of living crisis
(32 minutes later)
Supermarket and consumer goods conglomerate insist they are protecting shoppers from inflation surge Supermarket chain and consumer goods company insist they are protecting shoppers from inflation surge
Sainsbury’s and the Marmite maker Unilever have both insisted they are protecting shoppers from inflation, denying accusations that some companies are profiteering from the cost of living crisis.Sainsbury’s and the Marmite maker Unilever have both insisted they are protecting shoppers from inflation, denying accusations that some companies are profiteering from the cost of living crisis.
“We are not profiteering in any form,” the chief executive of Unilever, Alan Jope, said as the consumer goods company insisted it was only passing on three-quarters of its increased costs to customers.“We are not profiteering in any form,” the chief executive of Unilever, Alan Jope, said as the consumer goods company insisted it was only passing on three-quarters of its increased costs to customers.
“We are very conscious that the consumer is hurting and that’s why we are not passing through the full price increases and are asking shareholders to bear some of the burden.”“We are very conscious that the consumer is hurting and that’s why we are not passing through the full price increases and are asking shareholders to bear some of the burden.”
His comments came as Unilever announced a 10.5% rise in sales in the first three months of the year led by a 10.7% rise in prices, indicating a dip in volumes. Sales of beauty, bathing and cleaning products recorded the fastest growth while the amount of nutrition items – such as mayonnaise and stock cubes – fell back as prices soared by 13.4%. His comments came as Unilever announced a 10.5% increase in sales in the first three months of the year led by a 10.7% rise in prices, indicating a dip in volumes. Sales of beauty, bathing and cleaning products had the fastest growth, while the amount of nutrition items – such as mayonnaise and stock cubes – fell back as prices soared by 13.4%.
Jope said Unilever’s profit margins had fallen by two percentage points to just over 16% between 2021 and last year, and were expected to remain at that level this year. He does not expect prices to begin to fall any time soon as Jope said the business continued to experience major increases in the price of its raw materials, including a 20% price in the rise of chemicals, a 15-30% rise in cocoa and sugar, and up to 20% rise in soya bean oil. “There is still high inflationary pressure,” he said. Jope said Unilever’s profit margins had fallen by two percentage points to just over 16% between 2021 and last year, and were expected to remain at that level this year. He said he did not expect prices to begin to fall any time soon and that the business continued to experience large increases in the price of its raw materials, including a 20% jump in the price of chemicals, a 15-30% rise in cocoa and sugar, and up to 20% increase in soya bean oil. “There is still high inflationary pressure,” Jope said.
The boss of Sainsbury’s promised the retailer would do “everything we can as fast as we can” to pass on any drop in the price of goods. Meanwhile, the chief executive of Sainsbury’s promised the supermarket chain would do everything it cold as fast as it could to pass on any decrease in the price of goods.
Announcing a better than expected 5% fall in underlying profits to £690m and a near-6% rise in sales in the year to 4 March, Simon Roberts, the chief executive, said the supermarket group was “absolutely determined to battle inflation for our customers”. However, he said widespread price falls were not likely to come soon as energy and labour costs continued to rise. Announcing a better-than-expected 5% fall in underlying profits to £690m and a near-6% rise in sales in the year to 4 March, Simon Roberts said the retailer was “absolutely determined to battle inflation for our customers”. However, he said widespread price falls were not likely to come soon as energy and labour costs continued to rise.
Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common.
If inflation is 10%, then a £50 pair of shoes will cost £55 in a year's time and £60.50 a year after that.If inflation is 10%, then a £50 pair of shoes will cost £55 in a year's time and £60.50 a year after that.
Inflation eats away at the value of wages and savings – if you earn 10% on your savings but inflation is 10%, the real rate of interest on your pot is actually 0%.Inflation eats away at the value of wages and savings – if you earn 10% on your savings but inflation is 10%, the real rate of interest on your pot is actually 0%.
A relatively new phenomenon, inflation has become a real worry for governments since the 1960s.A relatively new phenomenon, inflation has become a real worry for governments since the 1960s.
As a rule of thumb, times of high inflation are good for borrowers and bad for investors.As a rule of thumb, times of high inflation are good for borrowers and bad for investors.
Mortgages are a good example of how borrowing can be advantageous – annual inflation of 10% over seven years halves the real value of a mortgage.Mortgages are a good example of how borrowing can be advantageous – annual inflation of 10% over seven years halves the real value of a mortgage.
On the other hand, pensioners, who depend on a fixed income, watch the value of their assets erode.On the other hand, pensioners, who depend on a fixed income, watch the value of their assets erode.
The government's preferred measure of inflation, and the one the Bank of England takes into account when setting interest rates, is the consumer price index (CPI).The government's preferred measure of inflation, and the one the Bank of England takes into account when setting interest rates, is the consumer price index (CPI).
The retail prices index (RPI) is often used in wage negotiations.The retail prices index (RPI) is often used in wage negotiations.
Roberts said the cost of fresh foods such as meat, dairy and vegetables were likely to fall first – pointing to a recent cut in the retail price of milk as an example – but said some problems with shortages, such as with peppers and eggs – remained.Roberts said the cost of fresh foods such as meat, dairy and vegetables were likely to fall first – pointing to a recent cut in the retail price of milk as an example – but said some problems with shortages, such as with peppers and eggs – remained.
Unusually hot weather in Spain – of 38C – is now affecting production of vegetables in the country as production in the UK and the rest of northern Europe only starts to come on stream. Unusually hot spring weather in Spain – of 38C – is now affecting production of vegetables in the country as growing season in the UK and the rest of northern Europe only starts to come on stream.
Sainsbury’s predicted that profits were most likely to fall again in the year ahead – predicting an outcome of £640m to £700m as inflation on wages and energy remained high despite drop offs in the cost of freight transport. Sainsbury’s predicted its profits were most likely to fall again in the year ahead – forecasting £640m to £700m as inflation on wages and energy remained high despite the cost of freight transport easing.
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Pre-tax profits slumped to £327m, from £854m a year before, after £363m of one-off items, including the cost of restructuring its Argos business and write downs on the value of stores. Pre-tax profits slumped to £327m, down from £854m a year before, after £363m of one-off items, including the cost of restructuring its Argos business and write-downs on the value of stores.
Roberts said Sainsbury’s had spent more than £560m on keeping its prices down in amid high inflation over the last two years – £10m more than planned. “We really get how tough life is for so many households right now which is why we are absolutely determined to battle inflation for our customers. Our focus on value has never been greater,” he said. Roberts said Sainsbury’s had spent more than £560m on keeping its prices down during high inflation over the last two years and that the amount was £10m higher than what it had planned.
He said: “We really get how tough life is for so many households right now which is why we are absolutely determined to battle inflation for our customers. Our focus on value has never been greater.
“We are now the best value compared to our competitors that we have been in many years and we are delivering improved market share performance in Sainsbury’s and Argos.”“We are now the best value compared to our competitors that we have been in many years and we are delivering improved market share performance in Sainsbury’s and Argos.”
Sales of groceries rose by 3% in the year – suggesting shoppers had bought fewer items as inflation has remained well above 10% for some months . Sales of clothing fell by 3% and general merchandise sales were down by 0.4%. Roberts said inflation on goods in Sainsbury’s was running at half the headline rate which stood at 15% for food in March, according the to the British Retail Consortium trade body. Sales of groceries rose by 3% in the year – suggesting shoppers had bought fewer items while inflation remained above 10% for some months . Sales of clothing fell by 3% and general merchandise sales were down by 0.4%. Roberts said inflation on goods at Sainsbury’s was running at half the headline rate, which in March was 15% for food, according to the British Retail Consortium trade body.
Performance was strongest in convenience stores – where sales rose almost 10% led by a return of city centre workers and shoppers buying little and often in an effort to reduce waste. Sales online fell by 13.5% as shoppers returned to stores as the pandemic eased while supermarket sales rose by 1.9%. Performance was strongest in convenience stores – where sales rose almost 10%. This was led by a return of workers and shoppers to city centres who bought little and often in an effort to reduce waste. Sales online fell by 13.5% after shoppers returned to stores as the pandemic eased, while supermarket sales rose by 1.9%.
Roberts said Sainsbury’s was going to be widening its range of budget products as interest had increased rapidly in recent months. Shoppers are also buying more frozen food and dining at home more often to save cash.Roberts said Sainsbury’s was going to be widening its range of budget products as interest had increased rapidly in recent months. Shoppers are also buying more frozen food and dining at home more often to save cash.