Shoppers at Asda are setting themselves £30 limits at checkouts and petrol pumps, the supermarket’s boss says, as consumers tighten their belts because of the cost of living crisis.
Customers are employing several tactics to not overspend, said Stuart Rose, including putting fewer items in their baskets and opting for budget ranges.
“What we’re seeing is a massive change in behaviour,” he told the BBC. “People are trading back. They are worried about spending. They’ve got a limit that they’ve set out, too. They say £30 is one limit … and if they get to more than £30 then that’s it, stop. It’s the same with petrol.”
Lord Rose’s comments came as inflation continued to climb, hitting 9.1% in May – the highest rate in 40 years, amid record petrol prices and soaring food costs.
The chair of the UK’s third largest grocer said he could see last year that a jump in inflation was coming like a “train coming through a tunnel with a big flashing light on the top”.
The retail veteran, who previously led Marks & Spencer, Argos and Topshop, has been critical of government attempts to help households cope with the cost of living crisis, and called on ministers to do more.
“I would urge them to do more for those people at the bottom end of the earnings income scale,” he said, suggesting a VAT reduction or another reduction in fuel tax would be “helpful”.
Recalling the runaway inflation of the 1970s, Rose said the current rise in prices had been a nasty shock for consumers.
“I’m of the generation that remembers what it was like last time. And once [inflation] gets hold, it’s quite pernicious,” he said. “And it takes a long time to eradicate … We’re in danger of being in a place that it’s very difficult to extricate ourselves from.
“What’s rather sad is that the country, the government, perhaps the Bank of England, didn’t see inflation coming quickly. They’ve now recognized that.”
Rose previously told the Guardian he expected inflationary pressures to last into 2023, taking some time to fall away, meaning he thought the squeeze on household budgets and retailers’ profits would continue for some time.
Asda was deciding to what extent it could absorb rising costs, he said, and how much it would need to pass on to shoppers, as it competed with other supermarkets to win consumers.
“We’re doing everything we can. We’ve invested nearly £100m in the last month or so making sure customers get essentials at very, very attractive prices to try and help them,” Rose said.
He said the government was walking a tightrope as it tried to combat rising prices while not denting economic growth. Yet, he said, bringing down inflation was the “most important priority”.
“Once inflation gets embedded, it’s very, very hard to kill. If it means we have to slow the economy down for a while, and it looks as if we are heading for a recession, then so be it.”