Shoppers face rise in prices, says Mr Allan, left.
Tesco chairman John Allan said that despite inflation rocketing, food prices at his stores grew by just one per cent in the last quarter. But he predicted that would increase rapidly in the coming months as rising fuel costs hit the sector.
The mushrooming food bills will heap further pressure on ministers, who are already battling to contain surging energy prices while the huge increase in National Insurance contributions will hit wages from April.
Last year the Daily Express revealed how a supermarket price war at Christmas would keep prices artificially low but would result in across-the-board price increases heading into Easter.
Industry figures told how big chains desperate to keep customers amid cutthroat competition, moved to shield shoppers from the worst of the surge in costs at the busiest time of the year.
Mr Allan said the hike means some people will have less to spend on lux- uries, as it comes at the same time as a NI hike and a £693 rise in the average home’s annual energy bill, to £1,971.
He said the increase – offset by £350 of Government help, of which £200 has to be paid back – is “going to squeeze the hardest-up still harder”. Confirming that people will also be stung at the checkouts, Mr Allan told the BBC’s Sunday Morning programme: “Food is a relatively small part of household spending. It’s only about nine per cent.
“But of course, it’s a bigger proportion for those on the lowest incomes…15 per cent is significant.
“We’re concerned particularly about what can we do to try to protect those who are hardest up, who are going to suffer most from that. And in some ways, the worst is still to come.
“We are impacted by rising energy prices; our suppliers are impacted by rising energy prices. But we’re doing all we can to offset it.”
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Bank of England governor Andrew Bailey, fears inflation could hit 7.25 per cent by April and is unlikely to fall back to normal levels for at least two years.
The Bank raised interest rates to 0.5 per cent on Thursday with further hikes expected.
Despite accruing mammoth national debt during the pandemic, the Government has not ruled out stepping in with more support if energy bills rise again as expected in October.
Mr Allan added: “I predicted last autumn that food prices by the spring might be rising about five per cent.
“I sincerely believe that it’s not going to be any more than that, it might even be slightly less.
“But that’s the sort of number we’re talking about.”
He added that fuel prices are “unlikely to come down quickly”.
‘We are concerned to try to protect those who are hardest-up’
No government can control global gas prices, says KWASI KWARTENG
Business Secretary Kwasi Kwarteng
I know many readers will have seen the news of rising energy bills and felt worried, wondering where they’ll find the extra cash.
This isn’t a uniquely British problem. The wholesale price of gas has quadrupled in the past year, and the crisis is affecting the whole of Europe.
No government can control global gas prices. But we can take action to help consumers…which is exactly what we’re doing.
On Thursday, we announced that most households will receive up to £350 through our new Energy Bills Rebate. This is designed to take the sting out of the rise, by spreading the cost over a longer period. Our support comes in three parts. Part one will see domestic electricity customers – some 28 million households – get a £200 discount on bills from October. That discount will automatically be repaid through energy bills, with £40 collected each year for five years, at a time when we hope the global market will have recovered.
Part two will give £150 to those in council tax bands A to D in April.
Finally, we’re also giving local authorities a £150million fund to help low earners living in higher council tax properties, and those who are exempt from council tax.
On top of all this, we’re expanding eligibility for the Warm Home Discount by almost a third to help three million vulnerable households, and increasing it to £150 this year.
And, today, we’ll announce the latest areas that’ll benefit from our £1billion fund to upgrade social housing with energy efficiency measures to lower tenants’ bills.
- Kwasi Kwarteng is Secretary of State for Business, Energy and Industrial Strategy