British supermarket Sainsbury's today warned that the financial pressure on consumers "will only intensify" this year as underlying quarter sales fell 4% as demand for general merchandise fell.
The UK's second-largest supermarket said grocery sales fell 2.4% in the 16 weeks to June 25 as inflation soared and customers cut back on spending.Non-grocery sales fell 11.2%.
The result was described as in line with expectations, after market leader Tesco warned in June that Britons were buying less and switching to cheaper products.
Its underlying sales fell 1.5%, while smaller rival Morrisons reported a 6.4% drop in sales.
Chief executive Simon Roberts saidSainsbury'sunderstood the difficulties millions of families were facing right now.
"The pressure on household budgets will only intensify for the rest of the year and I'm clear that doing the right thing for our clients and colleagues will remain at the top of our agenda," he said today.
Consumer confidence in the UK has plummeted as households grapple with rising living costs.
Wages have failed to keep up with inflation, which hit 9.1% in May, and are heading towards double digits.According to some forecasts, food inflation is expected to hit 15% this summer and 20% early next year.
Sainsbury's will spend £500m over the two years to March 2023 to control prices and encourage shoppers not to turn to discounters.
Sainsbury's said customer perceptions of its value and quality are increasing and it is gaining market share.
But thanks to its stand-alone Argos brand, more of its sales than rivals come from groceries, adding to the pressure on consumers' disposable income.
Sainsbury'smaintained its full-year pre-tax profit guidance of £630 million to £690 million, down from £730 million in 2021-22.
The company also said its chief financial officer, Kevin O'Byrne, will retire in March 2023 and will be succeeded by commercial and retail finance director Blathnaid Bergin.
