A City AM analysis has found supermarket food inflation has risen significantly for the first time this year, signalling early warning signs of wider price pressures ahead.
The analysis tracks around 200 product prices across Tesco (TSCO.L), Sainsbury’s (SBRY.L), and Waitrose at the start of each month, offering a real-time snapshot of retail price movements.
The latest data recorded an average month-on-month price rise of 1.4 per cent in June, following a period in May when figures were largely unchanged overall.
The outbreak of war in Iran in late February, alongside the closure of the Strait of Hormuz, has pushed up freight costs globally while also reducing the supply of oil and fertiliser.
Those supply disruptions have sent inflation expectations surging and upended predictions of central bank interest rate cuts for the second half of 2026, with hikes now expected instead.
Economists at the Organisation for Economic Co-operation and Development, which comprises 38 major nations, forecast that UK inflation will peak at 3.7 per cent later this year.
Food inflation is regarded as particularly sensitive to energy costs and trade disruptions, meaning it is likely to run even higher than the headline figure projected by the OECD.
In May, Chancellor Rachel Reeves reportedly weighed introducing supermarket price caps across a range of essential foods, reflecting heightened government anxiety over the prospect of a summer inflation surge.
That proposal was subsequently abandoned after it drew widespread criticism from supermarket bosses and economists alike.
Bank of England governor Andrew Bailey told MPs at a Treasury Committee appearance that controlling the price of household essentials centrally is “not a sustainable thing in the long run” because it constituted “artificially moving prices relative to costs.”
Waitrose saw the steepest month-on-month price rises among the three retailers surveyed, with almost 40 per cent of products costing more in June than they did in May.
By comparison, just under 20 per cent of products rose in price at Tesco, while the figure was around 10 per cent at Sainsbury’s during the same period.
Alcoholic beverages led the broader price increases, with gin up an average of 10 per cent across the three supermarkets and premium tonic water rising by around 9 per cent.
Waitrose appears to be adopting a strategy of raising prices on storecupboard staples while simultaneously offering discounts on premium treats to retain shopper loyalty.
The employee-owned retailer increased prices on products including Heinz ketchup, Colman’s mustard, Pip and Nut peanut butter, Rowse squeezy honey, and Tabasco sauce during the period.
At the same time, Waitrose offered steep discounts on Lindt chocolate, Tony’s Chocolonely, Candy Kittens, and Kettle chips, suggesting a deliberate effort to soften the blow for consumers.
The meat aisle showed the sharpest divergence in pricing strategy, with a beef roasting joint down 5 per cent at Tesco but up 20 per cent at Waitrose over the same period.
Chicken breast prices fell by almost a quarter at Waitrose month-on-month, while the same product jumped 9 per cent at Sainsbury’s, highlighting how differently retailers are managing their ranges.
Overall, more than 70 per cent of products surveyed at Waitrose changed price since May, compared with 43 per cent at Tesco and just 16 per cent at Sainsbury’s.
The discrepancy is partly explained by the more frequent use of loyalty pricing discounts relative to list prices at both Tesco and Sainsbury’s, which can mask underlying price movements.