Bakery and food-to-go retailer Greggs (GRG) has declared 2017 a success, despite the fact that its full-year report won’t land with investors until late February. A net increase of 90 new stores helped total sales rise 7.4 per cent, while popular ranges – including a new gluten-free soup – pushed underlying sales up 3.7 per cent.
Despite this continued demand, the company has been forced to raise the prices of “classic favourites”, including the brand’s famous sausage rolls and its breakfast deal last September. At the time, Greggs' chief executive, Roger Whiteside, said price hikes were down to “industry-wide pressures emerging in commodities, as well as labour costs”. The UK's decision to leave the European Union also created “economic uncertainty”, according to chairman Ian Durant, who cited “increased pressure from cost inflation” as the main reason behind rising prices.
In light of the Tories' pledge to increase the National Living Wage to £8.75 by 2020, and the ongoing uncertainty of the UK's financial position, Mr Whiteside admits these issues could continue to affect the food retailer into 2018, and have a further inflationary impact on the price of its products. The UK inflation rate actually fell between November and December 2017, but Jacob Deppe at online trading platform Infinox said it was “only a small fall and we're not out of the woods yet”. Richard Lim, chief executive of research company Retail Economy, predicts that inflation will continue to fall. This doesn’t negate the fact that “food inflation remains near four-year highs”, with data showing prices of food and non-alcoholic beverages 4 per cent higher year on year.
