Ocado blames Reeves's tax rises for higher food prices
Tim Steiner, the chief executive of the online grocer, said it would be 'unrealistic' not to expect higher costs from the Budget not to lead to food price rises.
He said: 'Am I surprised to see inflation coming through? Of course not.
'You can't increase the cost of labour in food production and food distribution and food retailing in the way that we have, with National Insurance (NI) increases and the minimum wage increases, and not expect to see prices move.
'That would have been a wholly unrealistic expectation if anyone had that.'
His comments come after inflation accelerated to 3.6pc in June. Food inflation rose from 4.4pc to 4.5pc.
Retailers have warned that the decision to hit employers with increased NI contributions while simultaneously raising the minimum wage by 6.7pc would lead to higher prices in stores.
Mr Steiner said: 'It's not good to make people more expensive.'
He insisted that Ocado Retail was doing 'a lot to keep prices down for shoppers', adding that its average price increase was 'dramatically below the level of food price inflation'.
The typical basket value at Ocado grew by 0.7pc to £124.19 over the six months to June 1, which the company said reflected a 1.4pc increase in average item prices.
Balwinder Dhoot, of industry group The Food and Drink Federation (FDF), said this week: 'The pressure on food and drink manufacturers continues to build.
'With many key ingredients like chocolate, butter, coffee, beef and lamb climbing in price – alongside high energy and labour expenses – these rising costs are gradually making their way into the prices shoppers pay at the tills.'
Mr Steiner's comments came as Ocado Group swung to a profit of £612m over the half year, compared with a £153m loss over the same period a year earlier. The surge in profits was linked to a revaluation of its holding in Ocado Retail, its online grocery business which it runs under a joint venture with Marks & Spencer and accounts for separately.
Ocado Group also enjoyed the strong performance at its technology business, which sells warehouse tech to other retailers across the world. Revenues here rose 13.2pc to £674m.
Sales in the British retail business rose 16.3pc to £1.53bn. However, this division posted a loss after tax of £25m.
Mr Steiner said Ocado had felt a 'very minimal, if any' impact from the cyber attack which wreaked havoc on M&S over recent months.
He added Ocado was having 'constructive conversations' with M&S over a £190m payment linked to their joint venture, amid a brewing legal battle between the two.
M&S has refused to make the payment in a row over performance targets. Mr Steiner said: 'We've got a very strong working relationship with them and spent a lot of time with them in the last few weeks.'
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