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Tesco chairman John Allan has sounded the alarm over the increasing pressure on households as interest rates rise higher.
Allan, appearing on BBC’s Laura Kuenssberg programme yesterday, said the supermarket giant has “a moral responsibility to look after people” being squeezed by the prospect of higher mortgage payments on top of soaring food and energy bills.
“The reality is that the movement in interest rates is now going to lead to much higher mortgage [repayments] for millions of people,” Allan told the BBC.
“Lots of people I think are [already] struggling with the existing elements of the cost of living crisis in food and so on.”
Grocery price inflation hit new highs in September, now running at 13.9% and adding £643 to the avergae annual food bill, Kantar revealed last week.
Allan said he was “encouraged” by remarks from Jeremy Hunt over the weekend as the new chancellor attempted to calm jittery markets.
Tesco’s chairman called on the government to provide stability after the pound plummeted in value in the wake of Kwasi Kwarteng’s mini-budget.
Sterling rose this morning following news that Hunt, who replaced Kwasi Kwarteng on Friday, will make a statement later today setting out his tax and spending agenda.
Allan questioned the suitability of the Conservatives to continue running the country and said politicians needed “to look after those people suffering” and to set out a plan demonstrating how they will try to grow the economy.
“I don’t think we’ve seen a growth plan from the Conservatives, I hope we will… Labour’s ideas are on the table, and many are attractive, but at the moment there’s only one team on the field.”
When questioned by Kuenssberg on whether Tesco was prepared to absorb more costs to help customers struggling, Allan said the supermarket already had and pointed to a recent fall in profits.
Earlier this month, Tesco reported a 9.8% fall in operating profits to £1.3bn despite a 6.7% rise in group revenues to £32.5bn.
Tesco also guided down its profits expectations for the year towards the lower end of the range of between £2.4bn and £2.5bn.
Morning update
It’s been a volatile start for the FTSE 100 this morning, jumping up and down as markets try to get a sense of Hunt’s plans and whether Prime Minister Liz Truss can survive.
London’s blue-chip index is currently 0.3% higher at 6,877.56pts.
Early risers this morning include McBride, up 4.3% to 24.2p, Hotel Chocolat Group, up 2.9% to 120.4p, Glanbia, up 2.8% to €12.13, and Kerry Group, up 1.9% to €88.98.
Fallers so far include HelloFresh, down 6.3% to €20.98, Fever-Tree, down 5.6% to 917p, THG, down 4.5% to 38.8p, Virgin Wines UK, down 4% to 48p, and Science in Sport, down 3.2% to 15p.
Elsewhere, English winemaker Chapel Down has provided an update on its 2022 harvest.
It said that favourable growing conditions had enabled the delivery of both “an exceptional grape quality and yield”.
Across its 750 acres already under vine, the company has delivered a record tonnage of its key sparkling wine grapes - chardonnay, pinot noir and pinot meunier - as part of a total harvest of more than 2,000 tonnes.
This compares favourably with last year’s, weather-affected harvest of 1,400 tonnes. This year’s harvest is expected to enable the production of approximately two-million bottles of sparkling and still wines.
CEO Andrew Carter said: “This exceptional harvest has been achieved thanks to the skill and dedication of our talented team. English wine is enjoying rapid growth as producers like Chapel Down benefit from optimal conditions and sustained investment.
“Our strong performance in the first half of the year and the bumper harvest we have announced today leave Chapel Down well on track to meet our target to double the size of the business by 2026.”
This week in the City
After a quiet start, events pick up this week as earnings season gets underway.
The latest monthly Nielsen grocery sales figures are out tomorrow.
Wednesday brings the latest UK inflation figures, a trading update from Just Eat Takeaway and the latest quarterly results from Nestlé, while Procter & Gamble provides an update later in the day from the US.
First-half results were expected from embattled Naked Wines this morning, but the group instead released a statement about its plans to update the markets on its finances and new strategic plan in a presentation on Thursday.
Also on Thursday, beauty giant L’Oréal and tobacco giant Philip Morris provide quarterly update.
Deliveroo closes out the week with a Q3 update on Friday, while we also get the latest retail sales figures for September from the ONS and the closely watched monthly GfK consumer confidence survey.
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