Food prices could soar by as much as 10% this year, the chairman of Marks & Spencer (M&S) has warned.
The warning comes a day after Andrew Bailey, Governor of the Bank of England, warned that households could witness an “apocalyptic” shock from rampant food inflation.
Archie Norman, who has chaired M&S since 2017 and was previously the boss of Asda, said food prices would increase further during the rest of the year.
“It’s very negative for consumer discretionary income but it’s perhaps not apocalyptic,” he told BBC Radio 4’s Today programme.
“It wouldn’t be surprising to see food price inflation over the course of the year running towards eight per cent to 10%.
“But we don’t know that yet because it runs through the year – some has run through now but there is quite a lot still to come.”
Analysts have predicted that overall inflation could rise sharply to 9.1% for April, when the latest official data is unveiled by the Office for National Statistics (ONS) on Wednesday.
The ONS reported 5.9% food inflation in March and this is expected to have accelerated last month.
The supermarket executive, who was also previously a Conservative MP, said grocers have had to pass some cost inflation onto customers but said spending has been bolstered by customers’ savings built up during the pandemic.
Mr Norman said: “What’s 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 knocking onto almost everything.
“As a consequence, all food retailers in the UK are – because we operate on very thin margins – going to have to reluctantly allow some food price inflation to run through the system.
“At the moment, UK spending is pretty good because customers still have quite a lot of stored-up savings.
“The crunch is not going to be now, it is going to be in the autumn after people have come back from their holidays, spent their money and there is nothing left in the kitty.”
Meanwhile, the boss of Bidfood, one of the UK’s largest food wholesalers, said schools may have to reduce portion sizes for children’s meals.
Andrew Selley told the BBC: “The situation is going to lead to some difficult decisions for school caterers.
“Either they are going to serve smaller portions or use cheaper ingredients, which is not going to be good for children.”
He added that baked goods are currently up to 30% more expensive due to rising wheat prices, which are also due to feed into pasta, eggs and chicken.