UK supermarkets are taking a hit on credit markets after inflation accelerated to its highest in 40 years. Bonds issued by Asda, Iceland Foods, Tesco and grocery delivery company Ocado Group fell after data on Wednesday showed the UK consumer price index rose 10.1% in July from a year earlier. Supermarket bonds lagged behind a British pound Corporate Bond index because rising food prices were the biggest contributor to the monthly increase.
Inflation in the UK is higher than its Western European counterparts. The weak British pound, Brexit-related problems in the supply chain and rising energy prices are all contributing to this. Supermarkets are among the sectors with the greatest impact, as price increases for basic products such as dairy, meat and vegetables are difficult to pass on to consumers who are already under pressure.
