Sainsbury’s says Iran war to hit its shoppers and business

Dan Coatsworth, head of markets at AJ Bell, said: “Sainsbury’s results once again show its core business is doing well, and Argos is dragging its heels.

“While the ongoing disappointment with general merchandise strengthens the argument for jettisoning Argos from the group as soon as possible, Sainsbury’s is by no means in a bad shape.

“The grocery business is doing well, and the food-first strategy is clearly working.

“There is no time to sit back and relax.

“Competition is relentless in the grocery space and Sainsbury’s now faces the prospect of a new cost-of-living crisis.

“The Middle East conflict has led to a surge in oil prices and that will feed into higher costs for consumers and businesses.

“Individuals will see their weekly shopping basket become more expensive, while providers like Sainsbury’s will face higher input and running costs.

“Shoppers are going to have to make some big choices if they are strapped for cash. Either buy cheaper options or buy less.

“The pressure is now on Sainsbury’s to keep a lid on price hikes where possible and to absorb some of the pain, so customers don’t have to.

“Deciding to stomach some of the extra costs to keep prices low could yield benefits down the line, namely winning over more customers.

“But companies are typically reluctant to go down that road unless they have no other choice, and Sainsbury’s might want to protect its profit margins to keep shareholders happy.”