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Supermarket price inflation rose again last month as the imposition of the soft drinks ‘sugar tax’ reversed the recent trend of easing inflation, according to the Grocer Price Index.

A spike in soft drinks prices since the Soft Drinks Industry Levy came into force on 5 April meant the GPI, compiled by Brand View from over 60,000 big four supermarket SKUs, rose from 0.8% to 1.2% in the month to 1 May.

 Annual inflation in soft drinks jumped to 3.8% during the month, with prices up 5.4% on a month-on-month basis. 

This time a year ago, prices were ­actually falling by 1.7% as the under-fire category had failed to catch last year’s inflationary wave.

The jump in drinks prices was the primary driver of the overall GPI rising back to 1.2% - a reverse of the trend of declining inflation since it hit a high point of 2.9% in the month to 1 October. 

Despite the uptick, overall supermarket inflation remains at a lower level than a year ago, though on a month-on-month basis the GPI was up 1.6% - the highest monthly jump since February 2013.

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Morning update

In this week’s edition of The Grocer there is in-depth analysis of the blockbuster Sainsbury’s/Asda deal and an investigation into their store overlaps, what it means for suppliers, what it tells us about Walmart’s approach to the UK and more.

Also in The Grocer this week, direct-to-consumer dog nutrition startup is set for major international expansion after being acquired by Nestlé Purina PetCare, Lucozade Ribena Suntory sales dropped by 6% in the year it undertook the controversial reformulation of its Lucozade Energy range and craft food delivery company Craved has returned to the crowd for £200k in funds to launch a Naked Wines-style subscription service. 

Check out later this morning for all the details.

Elsewhere, packaging group Smurfit Kappa Group (SKG) posted first-quarter underlying revenue growth of 7% year on year and group EBITDA growth of 22% to €340m (£300m).

The company said the results reflected the ongoing benefits of its capital investment programme and strong demand in most markets where it was increasingly working with its customers to help them sell more and reduce their cost of doing business.

The group continued to implement pricing initiatives and experienced good demand growth across most markets with reported revenue of €2.2bn.

The first quarter outcome was positively influenced by lower average recovered fibre costs of €17m year on year, which were largely offset by higher other costs and a negative currency translation impact primarily related to the fall in the US dollar versus the euro.

It had continued to expand its network of Global Experience Centres bringing the total to 23 in March with the opening of its Mexico City Experience Centre.

These experience centres provided a platform to deliver its “industry leading portfolio” of smart applications that helped customers “win” in their marketplace by applying the group’s scale and depth of data.

Tony Smurfit, group chief executive, said: “Smurfit Kappa Group has again delivered a strong set of results with significant improvement across all key metrics. We have momentum in price recovery in our corrugated business, demand remains robust and paper markets remain tight.

“Paper-based packaging is the sustainable, renewable and recyclable packaging option for our customers and is increasingly used as a key merchandising medium across industries. We have what we consider to be the team, unique performance culture, asset base, innovation capability and financial capacity to capitalise on an increasingly attractive outlook for our business.”

Trading in the second quarter remained very encouraging with good demand across most regions, continued corrugated price recovery and lower sequential recovered fibre costs.

“For the year, while recovered fibre pricing remains uncertain, we have strong momentum in the business and expect continued corrugated price recovery and execution of our medium-term plan, further enhancing SKG’s operating platform for sustained growth. We are excited about our prospects in the short, medium and long-term and expect our 2018 EBITDA to be materially better than 2017,” Smurfit said.

On the markets this morning, the FTSE 100 opened up 0.3% at 7,525.1pts

Early risers include Fevertree Drinks (FEVR), up 1% at 2,882p, Just Eat (JE), up 2.3% at 814.6p, PayPoint (PAY), up 3.5% at 889p, Ocado (OCDO), up 0.8! at 570p and Sainsbury’s (SBRY) up 0.7% at 304.1p.

Fallers so far today include McColl’s Retail Group (MCLS), off 2% at 245p, AG Barr (BAG), down 1.9% at 679p, Britvic (BVIC), down 0.5% at 732.5p and Devro (DVO), also down 0.5% at 222.1p.

Yesterday in the City

The FTSE closed down 0.5% at 7,502.7pts.

Kellogg Company (K) posted first-quarter organic net sales up 0.6% from $3.2bn to $3.3bn and operating profit up 81.7% from $280m to $510m. Reported net sales rose 4.7% to $3.4bn.

Steve Cahillane, Kellogg Company’s chairman and chief executive, said it was a strong first quarter with net sales, operating profit and earnings per share all achieving year-on-year growth, keeping it well on target for its full-year targets.

“We made visible progress on key elements of our growth plan, achieving accelerated growth in frozen foods and Pringles, stabilizing cereal in developed international cereal markets, and realising underlying improvement in US Snacks following our transition out of direct store distribution.

“We also accelerated our growth in emerging markets, and we increased our investment stakes in our fast-growing West Africa ventures. We still have work to do, and our investment in capabilities and growth will continue, but we are firmly on the right track,” he said.

Parsippany, New Jersey company B&G Foods (BGS) posted first-quarter net sales up 4.7% to $431.7m, and a 2.9% fall in adjusted EBITDA to $89.4m.

Robert Cantwell, president and chief executive, said the company had a “balanced performance” across its portfolio led by the strength of its largest brand, Green Giant.

“Net sales of Green Giant frozen products increased by $10.8m or 12.8% during the quarter. This marks the fourth consecutive quarter of double digit growth in net sales of Green Giant frozen products, he said.

Michael Dowling retired from Kerry Group’s (KYGA) board effective from the end of the company’s AGM yesterday. Philip Toomey has succeeded him as chairman.

Toomey joined the Kerry board in February 2012 as senior independent director. He became chairman of the audit committee a year later. Toomey has stepped down from the audit committee and as senior independent director.

Market fallers included Applegreen (APGN), off 1.4% at 559p, Greencore Group (GNC), down 1.3% at 155p, Sainsbury’s (SBRY), down 1% at 302p, Majestic WINE (WINE), fell 1.1% to 418p, Ocado Group (OCDO), 1.7% to 565.4p and PayPoint (PAY), down 2.2% to 859p.

Stocks on the up included Tesco, up 1.1% at 239.1p, Morrisons (MRW), up 1.2% at 242.6p, McColl’s Retail Group (MCL), up 3.7% at 250p and Devro (DVO) closed up 1.8% at 223p.