Sainsbury's takes inflation hit on the chin as Aldi and Lidl loom | Nils Pratley

With supermarkets facing tough competition from discounters, acquiring assets such as Argos looks sound

"We entered the quarter with deflation and exited the quarter with inflation," declared Mike Coupe, chief executive of Sainsbury's, describing shop prices in the most recent trading period. Once upon a time, this would have been taken as excellent news for shareholders, as opposed to customers. Inflationary breezes, allowing prices to be raised faster than overheads, used to be a supermarket's best friend and surest way to protect profit margins. Not now.

Coupe didn't give a figure for price inflation at Sainsbury's, but it is unlikely to be as high as he - and his competitors - would wish. Industry consultant Kantar put the rate at 1.4% last month. That was double the rate in the previous month, but we're not talking about the 5% within six months that his predecessor, Justin King, forecast four months ago for the entire industry.

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