JPMorgan Analyst Sounds Deflation Warning for Grocery Stocks

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The potential for lower food prices in Europe is reason to be cautious on the grocery sector, according to JPMorgan Chase & Co. analyst Borja Olcese.

The broker downgraded stocks from Tesco Plc to Royal Ahold Delhaize NV on Tuesday, sending share prices lower.

Food inflation still remains high at a global level amid trade disruptions and extreme weather conditions. Grocery bills in the UK surged at their fastest pace in more than four decades earlier this year, though recent data suggest that food inflation is cooling. While JPMorgan’s base case is for food inflation to normalize this year, further consumer stress could result in deflationary pressures, Olcese said.

Ahold Delhaize fell as much as 6.8% in Amsterdam, the steepest decline since May 2022. Tesco slid as much as 3.1% in London, while Jeronimo Martins dropped as much as 4.8%. Personal care, drug and grocery stores was the worst-performing subgroup in Europe’s benchmark Stoxx 600 Index.

 

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