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Liverpool Echo
Liverpool Echo
World
Ryan Paton

Tesco boss's eight week warning to shoppers as 'worst yet to come

The chairman of Tesco has said the "worst is yet to come" regarding rising food prices.

John Allan issued the warning as the UK faces a cost of living crisis as a result of surging energy prices and increased national insurance contributions in April.

The boss of the supermarket giant appeared on BBC's Sunday Morning programme ahead of a potential 5% increases in Spring.

READ MORE: Energy bills you may not have to pay due to certain rules

He said: "Food is a relatively small part of household spending, it's only about 9%, that figure has halved in the last half century.

"But of course, it's a bigger proportion for those on the lowest incomes. So I think 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 because although food price inflation in Tesco over the last quarter was only 1%, we are impacted by rising energy prices; our suppliers are impacted by rising energy prices.

"So the likelihood is that that inflation trigger will rise but we're doing all we can to offset it."

The governor of the Bank of England, Andrew Bailey, has said that inflation could hit 7.25% by April and is unlikely to fall back to normal levels for two years.

The Bank raised interest rates to 0.5% on Thursday last week with further rises expected.

It comes as the government said it 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 5%.

"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.

"But of course 5%, if you're spending - as some of the least well-off families are spending - 15% of your household income, is significant.

"It troubles us and I'm sure troubles many people that people may have to struggle to choose between heating their homes and feeding their families and that's clearly not a situation that any of us should tolerate."

He added that fuel prices are "unlikely to come down very quickly".

Mr Allan continued: "There has been a huge surge in fuel prices in the last year. And I think our hope is that they will now stabilised and ultimately come down but they're unlikely to come down very quickly, I think."

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