Asda's executive chairman has warned there is “no doubt” about price rises as a result of this summer’s extreme heatwaves.
Farmers have endured some of the worst harvests on record as sweltering temperatures and a dire lack of rain have devastated crops.
Fresh produce shortages
Allan Leighton said when it came to certain fresh produce “there has been some shortage from time to time. It is on a day to day basis. But there’s no doubt that there will be inflation on produce.”
He went on: “I think you will see a bit of inflation in produce, and bit more in fresh, certainly over the next couple of months. It’s potatoes, broccoli, cucumber - it’s everything that comes out of the ground.”
Asked the scale of price rises, he said: “It’s difficult to say, because we are in a bit of wait to and see. Only in the next three or four weeks will we get a sense of it.”
Asda pledges to inflate below market
Mr Leighton pledged that Asda would “inflate below the market” - in other words, raise its prices by less than rivals. “One of the things we will try to do is remediate that without putting the pressure on farmers,” he added. “We will take some of that. It is very volatile, it is day-by-day, and it crop-by-crop.”
His comments came as Asda said takings had grown for the first time in more than two years. The Leeds-based chain has battled with competition and the financial burden of a debt-fuelled private equity takeover.
Asda’s takings - excluding fuel - edged up 0.2% in the seven weeks to mid-August. It followed a rise of 0.4% in the previous three months, although that included sales of petrol and diesel.
Budget plea to Chancellor
“While this progress is encouraging, we are still in the foothills of recovery,” said Mr Leighton, who faces a titanic struggle to turn around Asda’s fortunes. “There’s still more work to do as we focus on building a stronger business for the long term.”
The industry veteran, who rescued the supermarket from the brink of collapse in the 1990s when he was previously at Asda, said measures to come from PM Andy Burnham’s new government will have a big impact on consumer confidence.
Mr Leighton praised Mr Burnham for making a number of “clever” announcements up to now, but said Chancellor John Healey’s Budget at the end of October would be key.
He called on Mr Healey - who he called a good appointment - to not do anything “that would inhibit growth, that would be a step forward. We need a model that enhances growth, that would be good. It is a bit of a tipping point, frankly.”
