COST PRICE PRESSURE
Sainsbury’s in inflation alert
Britain’s second-biggest retailer, cautioned that cost price pressures would weigh on its business in 2017
London — Sainsbury’s, Britain’s second-biggest retailer, cautioned that cost price pressures would weigh on its business in 2017 as it reported a small decline in underlying sales over the past three months. An almost 18% devaluation of the pound versus the dollar and a 12% fall against the euro since last June’s Brexit vote, which has driven up import costs, combined with commodity price fluctuations, is affecting Britain’s supermarkets. "When we talk about uncertainty those factors weigh very heavily on underlying cost prices and therefore retail prices," Sainsbury’s CE Mike Coupe said on Thursday. "We would acknowledge that we’ve gone from an environment that has been deflationary for two-and-a-half years to being inflationary," he said. While a return to food price inflation, in moderation, could be welcomed by investors in grocery stocks as it could boost sales and profit margins, the flip side is that rising inflation could begin to squeeze consumers’ purchasing power. Coupe s...
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