- Q1 like-for-like sales up 9.8%
- Says has returned to volume growth
- Keeps profit guidance for the full year
LONDON, July 4 (Reuters) - Sainsbury's, Britain's second largest supermarket group, said on Tuesday food inflation was starting to fall as it reported a 9.8% rise in underlying sales in its latest quarter and a return to volume growth.
The group, which has a 15% share of Britain's grocery market, also maintained its financial guidance for the full 2023-24 year - underlying pretax profit between 640 and 700 million pounds ($812-$888 million) versus 690 million pounds made in 2022-23.
Trading conditions in the 16 weeks to June 24, its fiscal first quarter, were dominated by stubbornly high inflation, which has become a major political issue in Britain, outstripping pay growth at a time of rising interest rates, putting household budgets under strain.
Food and drink inflation was 18.3% in May according to the most recent official data, and 14.6% in June according to the most recent industry data.
"Food inflation is starting to fall and we are fully committed to passing on savings to our customers," Sainsbury's chief executive Simon Roberts said, pointing to investment of 60 million pounds in lower prices since March.
"Prices on our top 100 selling products are now lower than they were in March, against a market where prices have gone up," he said.
Grocery sales rose 11.0% in the quarter, and general merchandise sales were up 4.0%. However, clothing sales fell 3.7%.
Sainsbury's is having to balance the increased cost of products from suppliers with trying to prevent shoppers switching to discounters Aldi and Lidl.
It is price matching Aldi on hundreds of key items and leveraging its Nectar loyalty scheme.
Last month, market leader Tesco, reported a 9% rise in underlying UK sales for its first quarter and said food inflation had peaked.
All of Britain's major grocers have cut the prices of some staple products in recent weeks.
($1 = 0.7883 pounds)
Reporting by James Davey, additional reporting by Sarah Young, editing by Paul Sandle
Source: Reuters