Online grocer Ocado has warned that Brexit could send supermarket prices surging as the plunging pound pushes up costs for retailers.
Chief executive Tim Steiner said the weaker pound may lead to “inflationary pressure”, but assured he did not believe Brexit would spark a sudden crash in the UK retail market.
His comments came as Ocado posted a slowdown in half-year earnings growth amid “significant challenges” in the sector.
Ocado reported a 5.7 per cent rise in underlying pre-tax earnings to £40.4 million for the six months to 15 May, against 11.4 per cent growth a year earlier.
But it secured another double-digit rise in retail sales, up 13.9 per cent to £582.9m, and said it was gaining market share.
The results come as it faces competition from the launch of Amazon’s rival fresh food service earlier this month.
Steiner said the group had seen “absolutely no impact whatsoever” yet from AmazonFresh, but added the firm was “keeping a close eye” on the new competition.
He added that Ocado had seen no impact so far from Brexit on trading and consumer demand.
“We don’t believe Brexit will have a significant impact on the business, but we’re waiting to see what happens to pricing,” he said.
On fears for consumer spending and UK retail, he added: “We’re not expecting the whole thing to suddenly collapse.”
Ocado imports a lot of its fresh food and produce, as do other supermarkets, and will be impacted by the weak pound making overseas goods more expensive.
It could bring to an end a welcome lengthy spell of falling supermarket prices for shoppers, but Ocado said the weaker pound would also make its technology more attractive to overseas buyers.
Steiner said ongoing food price deflation and a fierce price war saw the supermarket sector “experience significant challenges during the period”.
Ocado’s average basket value declined by 2.2 per cent to £110.10 in the first half due to price deflation pressures.
But Steiner added: “Our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate.”