ITV News Political Correspondent David Wood reports on how rising energy costs filtering through the supply chain will hit Tesco shoppers in the pocket over the coming months
The chairman of Tesco has added to the grim outlook for the rising cost of living, warning the worst increase in food prices is "yet to come".
People up and down the country are already facing surging energy prices and increased national insurance contributions in April.
Now retail boss John Allan has said, though food prices at the supermarket chain grew by only 1% in the last quarter, they could go up by 5% in the coming months.
Mr Allan told the BBC’s Sunday Morning programme: “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?"
He warned: “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 warned 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 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, who believes that fuel prices are “unlikely to come down very quickly”, 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.”
Analysis by the Liberal Democrats shows households in north Wales and Merseyside face the highest electricity and gas bills, £126 more for the same amount than the North East, where people pay the least.
Households in the South West pay almost £109 more, while those in London pay £97.59 extra.
Liberal Democrat leader Ed Davey said: “It is grossly unfair that at a time millions are facing eye-watering increases to their energy bills, some people are paying more based simply on where they live. “If the Conservatives were serious about levelling up, they’d end this energy postcode lottery now.”