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Food prices could go up by 10% this year, M&S boss warns

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Food price inflation could hit 10% this year, M&S chairman Archie Norman warned. Photo: Budrul Chukrut/SOPA Images/LightRocket via Getty Images
Food price inflation could hit 10% this year, M&S chairman Archie Norman warned. Photo: Budrul Chukrut/SOPA Images/LightRocket via Getty Images

The chairman of Marks and Spencer (MKS.L) warned on Tuesday that the price shoppers pay for food in stores could soar by 10% this year, adding to the rising cost of living gripping households.

Archie Norman told the BBC's Today Programme: "It wouldn't be surprising to see food price inflation over the course of the year running towards 8%-10%, but we don't know that yet."

Norman, a former Tory MP, also said the crunch time for many households would come after the summer holidays when they find "there is nothing left in the kitty".

"What is happening is global prices are rising, it’s not to do with UK food so much as the effect of freight costs, wheat prices, oil and energy prices go into almost everything," he added.

"As a consequence, all food retailers in the UK are, because we operate on very thin margins, we are reluctantly going to have to allow some food price inflation to run through the system."

Grocery inflation hit 5.9% in April, its highest level since December 2011, according to data from Kantar.

Read more: Apocalyptic: Why experts fear a steep surge in food prices

It follows Bank of England (BoE) governor Andrew Bailey's "apocalyptic" comments on Monday after he warned global food prices were rising, and pointed to further UK interest rate hikes to control inflation.

The governor told the Treasury Committee that runaway energy and food costs driven by global market forces were beyond his control, admitting he feels "helpless" when it comes to surging inflation.

"The risk I'm going to sound rather apocalyptic about I guess is food," he said. "Ukraine does have food in store but it can’t get it out at the moment."

Read more: UK braces for interest rate rises after 'apocalyptic' warning from BoE's Bailey

Ukraine, which is known as the "breadbasket" of the world, is one world's biggest exporters of cooking oil and grain.

"While the finance minister was optimistic about crop planting, he said at the moment we have no way of shipping it out as things stand, and it is getting worse," Bailey added. "That is a major worry. It is not just a major worry for this country, it is a major worry for the developing world."

However, the M&S boss distanced himself from Bailey's comments, saying that was not a phrase he would use as he stressed that wages have been rising "quite well" in the UK.

"We've given all our people [an] over 5% wage increase this year," Norman said. "So it's very negative for consumer discretionary income but I wouldn't use the word apocalyptic, certainly not for our customers."

New figures from the Office for National Statistics released on Tuesday, showed UK wages continued to fall further behind the rate of inflation in March.

Average earnings excluding bonuses fell by 1.9% compared to a year earlier, the biggest decline since 2013, while unemployment was 3.7%, its lowest rate since 1974, for January to March 2022.

Although wages excluding bonuses jumped 4.2% in the first quarter, double the 2.1% average in the decade before the pandemic, it was being offset by runaway inflation and a surging cost of living.

Watch: How does inflation affect interest rates?

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