Yesterday, Associated British Foods rebuffed claims that the grocery industry may profit from high inflation through artificially raising prices.
Eoin Tong, finance director of the Food and Retail Group, stated: “The UK retail landscape has to be among the most competitive in the world. There aren’t many places where you can hide. “Everyone knows how the grocery store works. That’s your world.”
In response to the Bank of England’s aggressive rise in interest rates, from 4.5 to 5 percent, in an effort to combat persistently high inflation, government officials have increased their scrutiny of food producers and supermarkets as well as banks, utility companies, and banks amid concerns they may be using inflation to increase profits.
The Bank for International Settlements (BIS), which supports central bankers, warned that global economic growth is in danger of being trapped permanently in a high inflationary trap, which will be hard to escape as companies and workers chase higher prices.
Tonge, a 50-year-old woman, told me: “Either you’re competing aggressively against Tesco, or your suppliers are competitively competing with each other. There aren’t many places to hide. “There might be a few places to hide, but from my experience there aren’t that many in UK supermarkets.”
Associated British Foods has increased its full-year profits following a strong third-quarter at Primark, its discount retailer and its food and grocery businesses.
The Weston family controls the conglomerate that is listed on FTSE 100. It expects adjusted operating profit to be “moderately higher” than last year, when it grew by 22 percent to £1.43billion. The company’s previous forecast was that operating profit would “be broadly in line” with the previous year. The group revenue increased by 16 percent to £4.7 billion over the past 12 weeks, compared to a year earlier.
ABF is active in 50 countries. It also produces products like Kingsmill bread and Ryvita crackers, Twinings Tea and bakery ingredients such as flour and yeast.
The company is a major producer of sugar beet and cane sugar under brands such as Azucarera and British Sugar.
Primark has seen its summer collection sales increase due to the warmer weather. The retailer’s sales grew 13 percent to £1.99billion, thanks in part to higher average selling price. Similar-to-like sales increased by 7 percent. This followed a positive trading update from rival retailer Next this month, which raised its full-year sales forecast.
The growth of its grocery and ingredient business was driven primarily by increased prices, which offset the inflationary pressures on input costs. Tonge stated that while volumes were negative in certain parts of the business, they were positive elsewhere.
Sugar sales continued to grow in Africa’s key cane markets, with revenues up 51% to £665 millions. The company reported that its UK sugarbeet crop is progressing well, despite the delay in planting.