New figures show inflation was at 2.3 per cent last month, unchanged from February, and expert Andrea Felsted said supermarkets would up the costs of products consumers “don’t really notice”.
The Bank of England has predicted that inflation will shoot up in the coming months as Brexit negotiations take place to reach 2.8 per cent in the first half of 2018.
Ms Felsted said there was concern in the industry that shoppers may be “driven” from major UK supermarkets to the German alternatives.
Asked on Sky News whether supermarkets would have to push up prices because margins were now too tight, Ms Felsted said: “I think they will have to increase to some extent and they will increase in areas where the consumer doesn’t really notice it.
Andrea Felsted said shoppers could be "driven" to Aldi and Lidl
The big worry is that too much inflation comes through and that drives consumers back to the German discounters Aldi and Lidl
“The big worry is that too much inflation comes through and that drives consumers back to the German discounters Aldi and Lidl, so it’s a very delicate balance that they have to strike.”
Discussing Aldi and Lidl’s raising of milk and bread prices towards the end of last year, which benefited the big four UK supermarkets, Ms Felsted reiterated new price rises would be placed elsewhere.
She said: “That’s a key price product that consumers really notice the price of, where they may not notice the price so much is in other products and that’s where the increases will come through."
Food, alcohol and clothing costs were seeing the biggest increases to the cost of living, while air fares and motor fuel prices helped keep inflation on hold, according to the Office for National Statistics.
Brexit Negotiations: Britain's sternest enemies Tue, April 4, 2017
According to a new index, the EU27 countries fall into three groups: hard-core, hard and soft. These are the countries with the highest scores which indicate a fairly strong opposition to Britain’s position
AFP/Getty Images 1 of 7
Get Quotes on Home Insurance
France has the highest score in the index at 32.5
Its forecast inflation is set to increase to over three per cent this year.
However, most experts don't expect the Bank of England to raise interest rates as Britain begins exit negotiations from the European Union (EU).
Lidl and Aldi have grabbed a record share of UK grocery spending as shoppers step up their search for bargains in the face of sharply rising prices.
The German rivals attracted an extra 1.1 million customers over the past three months to take their combined share to 11.7 per cent.
That compares with the 10.4 per cent of Morrisons, the smallest of Britain’s “big four” supermarkets.
Meanwhile, Britain's economy could get a four per cent boost if the Government avoids imposing tariffs on imports after Brexit, an economist has said.
Consumers will benefit from cheaper food and other goods as long as ministers remain committed to free trade with the rest of the world, they said.
Professor Patrick Minford, a leading member of the group, accused Chancellor Philip Hammond of “economic illiteracy” for appearing to rule out the approach.