Morrisons has warned its sales and core profits could be hit this year as shoppers try to cut costs due to rising inflation and the war in Ukraine.

Inflation is expected to reach 9% later this year, according to the Office for Budget Responsibility, and living standards are forecast to fall further than in any year since at least the 1950s.

Britain’s fourth-largest grocer said on Monday: “We are taking steps to mitigate the impact of these developments on our EBITDA (core earnings) for the remainder of the year.

“Unless these conditions improve, the impact of these developments could have a material adverse effect on our sales and EBITDA for the year.”

Morrisons was acquired last year by private equity firm Clayton, Dubilier & Rice.

It trails Tesco, Sainsbury’s and Asda in annual revenue.

But it produces more food in store than its rivals do, and is the only major supermarket with its own abattoir and meat-processing operations.

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It reported adjusted core earnings of £941m for the year to 30 January, 2022.

Cost of groceries is rising

Morrisons’ warning comes less than a week after data company Kantar reported that the cost of groceries had risen by 5.2% compared to a year ago, with inflation in the previous four weeks hitting its highest level in almost a decade.

But despite higher prices in stores, supermarket sales had fallen by 6.3% in the 12 weeks to 20 March, compared with a year ago.

The report said that, with life returning to normal following the easing of pandemic-related restrictions, people were eating out more.

Fraser McKevitt, head of retail and consumer insights at Kantar, also said at the time that the number of supermarket visits was down slightly, possibly due in part to higher fuel prices.

Read more: Ian King – Why the Russian invasion is leading to global food shortages

Concerns have already been raised that Russia’s invasion of Ukraine could lead to food shortages in many countries, particularly as Ukraine is one of the world’s largest wheat producers and exporters.

Late in March, Sky News business presenter Ian King reported that Ukraine was struggling to get wheat out of the country, due to Russia’s blockade of Black Sea ports.

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