Asda Profits Plunge Amid Warning of Soaring Food Prices

Asda said its underlying full-year profit fell by about one-third to £764 million , and the retailer warned that higher costs in the food supply chain could push grocery prices up in the UK.

The update, released on Friday, also pointed to pressure from fuel markets linked to the conflict in the Middle East, which Asda said is feeding into higher petrol prices and creating temporary shortages at some filling stations.

What changed in Asda’s latest results

Asda reported that non-fuel sales declined 3.3% to £21 billion , a factor its executive chair, Allan Leighton , cited in explaining the profit drop.

The company also said it reduced net debt by £500 million to £3.1 billion and ended the year with £1.3 billion in cash.

Why Asda expects food prices to rise

Leighton said farmers are under increasing strain from higher input costs, including fertiliser, energy, and fuel, and he argued that these pressures are likely to translate into food price inflation.

He added that Asda has seen a “trickle of requests” from suppliers seeking higher prices, while noting that the timing and scale of those requests differ depending on the commodity.

Fuel costs, shortages, and the Middle East conflict

Asda linked the Middle East conflict to higher fuel prices and said the situation has contributed to temporary shortages at petrol stations.

The company pointed to the UK average price of unleaded petrol rising to 150p per litre , a move that can affect household budgets directly and also raise distribution costs across retail supply chains.

Calls for government action and wider retail signals

Leighton urged the UK government to consider easing fuel duties or offering support to farmers for energy and other operating costs.

He said the government is receiving £3 billion in income from rising fuel duties and suggested that money should be redirected to support the agricultural sector.

Consumer confidence and what remains uncertain

Asda said its consumer confidence surveys show sentiment weakening in connection with the Middle East conflict, and it noted that other retailers, including Next and H&M , have observed similar patterns.

Those retailers have indicated that a prolonged conflict could lead to price increases and weigh on consumer spending, but the duration of the conflict and the path of fuel and farm input costs remain unclear.