* Industry competition will hold back price rises
* Food prices fell in 12 weeks to Oct. 9 - Kantar
* Inflation will be "kept to a minimum" - Tesco exec
* Tesco has "massive respect" for Unilever
By James Davey
LONDON, Oct 18 Food price rises in the wake of
sterling's post-Brexit vote slump will be softened by intense
competition in the industry, which is currently still driving
them lower, grocery executives said on Tuesday.
Most economists believe food prices are set to rise as the
pound has fallen 18 percent against the dollar and 14 percent
against the euro since Britain voted to leave the European Union
in June, making importing goods more expensive.
Nearly half of the food Britain consumes is imported.
While official data on Tuesday showed overall inflation
recorded its biggest jump in two years in September, industry
data from Kantar Worldpanel showed grocery deflation of 0.8
percent for the 12 weeks to Oct. 9 -- a contraction from 1.1
percent in Kantar's September report.
Though a slower rate than in recent months the falling
prices reflect a price war by discounters Aldi and Lidl on the
market and the competitive response of the big four players -
Tesco, Sainsbury's, Asda and Morrisons
. It also reflects deflation in some major categories
such as bacon, crisps and detergents.
Joanne Denney-Finch, CEO of industry body IGD, said food
retailers could not hold out forever if import prices do
"But they are competitive and that will mean quite a lot of
price increases will be muted," she told the IGD's annual
Matt Davies, UK CEO of Tesco, told the conference
the market leader would do everything to ensure food inflation
"is kept to a minimum", noting that its prices had fallen 6
percent in the last two years.
"Everybody should be very clear how damaging inflation is to
the economy, to retail businesses, to manufacturing businesses
and how lethal it can be to millions of people who are
struggling to live from week to week," he said.
Tesco had a row with major supplier Unilever last
week after it tried to push through a 10 percent rise in prices
for top-selling brands, including Marmite.
"All of our partners are very aware as to how damaging
inflation is and we're working constructively to deal with
that," said Davies.
"We have 100 percent of the time massive respect for
Unilever, 99 percent of the time we operate brilliantly
together," he added.
Mike Coupe, CEO of No. 2 player Sainsbury's, reiterated that
while the pound's devaluation was inflationary there were also
deflationary pressures because of commodity price movements.
He also noted that Britain's big supermarket groups operate
in a world market where supply and demand constantly adjusts.
"Products will be sourced from different areas of the world
to mitigate to some extent the cost pressures of the industry,"
"Having said that there are cost pressures in the
industry...and it would be wrong to shy away from that."
(Editing by Susan Thomas)