Sainsburys store_0001

Source: Sainsbury’s

The retailer said it is now paying less for some products

Sainsbury’s fired the latest salvo in the price deflation war this week with Tesco, Lidl, Aldi all quickly following suit.

Sainsbury’s made the first move on Tuesday by cutting prices on four lines of own label bread and three lines of butter. It said it was passing savings onto customers after a fall in prices paid to suppliers.

Sainsbury’s 800g wholemeal bread is down by 10p to 75p, while 250g of salted butter is down by the same amount to £1.89.

Tesco, Lidl, and Aldi all quickly moved to make the same cuts on butter. On bread, Aldi has reduced prices from 79p to 75p from 79p, while Tesco is down from 85p to 75p.

The decision to cut prices marks another step in a deflationary trend after relentless price rises over the last year. It follows falls in underlying commodity prices, with wheat down 35% in the year to March whilst UK milk fell by 32%.

These latest price cuts mean Sainsbury’s butter is now marginally cheaper than last year.

Last month, Sainsburys also reduced the price of its own-brand milk although said this would not affect the price paid to farmers.

In March, David Sables, CEO of Sentinel Management Consultants, warned that suppliers must prepare for deflation.

Writing in The Grocer, he said many suppliers anticipated a storm of retailer pressure when inflation turns.

“We know our customers are always looking for help with the cost of living, which is why we are constantly considering ways to keep prices low,” said Rhian Bartlett, Sainsbury’s food commercial director.

“We have been battling hard to beat inflation and whenever we are paying less for the products we buy from our suppliers, we will pass those savings on to customers. As we see the commodity prices starting to fall for wheat and butter, we’re able to lower our prices on two of the products people buy most often, bread and butter.

“We are committed to offering our customers the best value possible so they can be confident they are getting a great deal on their everyday essentials when they shop with us.”

Sainsbury’s latest full year results, published in May, revealed group sales up 5.3% to £35.2bn, driven by inflation. Underlying profit before tax fell 5% to £690m, up 18% on pre-pandemic levels.