Sunak’s £15bn cost-of-living package isn’t enough, says Asda chief | cost of living crisis

The Asda chief said the government’s £15bn cost-of-living subsidy was not enough to help struggling families and only “a drop in the ocean” compared to the pressures consumers face.

Lord Stuart Rose, head of the UK’s third largest supermarket, said he would welcome the one-time payments announced by Chancellor, Rishi Sunak, on Thursday, of a minimum £400 for all families and up to £1,200 for the poor, but said: There is still constant pressure and a lot of hardening on people.”

The veteran retail expert, who previously headed Marks & Spencer, Argos and Topshop, said he expects inflationary pressures to persist into next year and take some time to gradually diminish, putting pressure on household budgets and thus on retailers’ profits for months to come.

He said Asda was spending £90m trying to keep prices low for shoppers as he agreed with Steve Rowe, head of Marks & Spencer, assessment that life would become more difficult for families and retailers in the fall as heating and lighting bills increased.

Higher basic costs are putting a damper on retail spending as families put fewer items in their baskets and look for discount deals like Aldi and Lidl, as they try to keep them within family budgets.

“It’s not going to stop suddenly,” Rose said. “I can remember the last time there was inflation [like this] It took nearly eight years to master. I’m not saying it’s going to take eight years but it won’t stop in a year.”

Rose said the problem of inflation could not be solved by consumer businesses or government alone, but she needed both to work with ministers, realizing it could be long-term.

The priority, he said, should be “trying to get help to those who need it most.” “You can give me £400 but I don’t need a deduction from the electric bill. It’s hard to focus but you have to look for the most disadvantaged people.”

Rose’s comments came when it emerged that average household disposable income fell by £40.38 a week in April, the biggest drop in at least 14 years, as a sharp rise in energy bills increased the cost of daily necessities.

Average disposable income fell to £205 a week, the lowest number since October 2008, as electricity prices rose by 53% and gas by 95%, according to monthly income tracker Asda.

Despite Rose’s downbeat assessment, Sunak’s mini-budget sent the stock market rushing to street retailers, reflecting hope in the city’s dealing rooms that an influx of fiscal support would help support spending across the British economy.

Retailers have warned that the energy shock will lead to a sharp reduction in spending on other goods and services, increasing the risk of a recession. Shares in retailers Ocado, Marks & Spencer, B&M and Associated British Foods owner of Primark were among the biggest gainers on the London stock market late Thursday.

What is good for family confidence should help the economy as a whole, said Kitty Usher, chief economist at the Institute of Directors. Figures last week showed that consumer confidence in Britain had fallen to its lowest level since the early 1970s, as families stared at the barrel of soaring energy bills taking their toll on their personal finances.

“While we would of course have liked to see direct help for commercial energy costs in today’s announcement, we fully understand that the priority should be to address the cost of living crisis for vulnerable families,” she said.

Shares in energy and utility companies fell, reflecting the expected £5 billion blow across the industry from the Sunak surprise tax, with SSE, National Grid and Centrica among the biggest losers.

Shares of energy companies BP and Shell soared, indicating the global scale of their operations and a relatively small share of profits in the UK. Harbor Energy and EnQuest, which specializes in oil and gas production in the North Sea, fell after the chancellor’s speech to the House of Commons.

A senior source in the North Sea oil and gas industry said: “This could have been worse, the level of the super discount is huge. However, this will not drive the investment forward because it takes years to get the licenses and rigs – which are like gold dust For now – in place.”

Ryan Newton-Smith, chief economist at the Confederation of British Industry, said the unexpected punitive tax could destroy investment in climate crisis reforms.

It is sending the wrong signal to the entire sector at the wrong time on the back of rising business taxes elsewhere. She said the government must work with business on a real plan to increase investment and drive growth again, particularly in areas such as energy efficiency.

Nigel Bucklington, CEO of renewable energy company Good Energy, welcomed what he called “targeted, substantial and rapid support for those struggling through this crisis”.

However, he added, “We have seen addressing the short-term problem, but the way out of this energy crisis in the long-term is through energy efficiency and clean, green, local renewable sources.”