Asda’s executive chair has called on the government to “stand up and start doing stuff” to support farmers and ease the price of fuel as he warned that food prices would inevitably rise as a result of the conflict in the Middle East.

Allan Leighton said farmers were under pressure but the supermarket had so far received “a trickle of requests not an avalanche” of cost price increases from its suppliers, as they were under pressure from higher fertiliser, energy and fuel costs.

“I do believe it will create inflation,” he said, adding that the pace of cost increases was volatile and quite different across the various commodities.

Leighton also warned of “temporary shortages’” at petrol stations, as supplies are squeezed by the conflict in the Middle East, with the RAC reporting on Friday that the average price of unleaded petrol in the UK had risen to 150p a litre.

Leighton accused the government of benefiting from £3bn of income from fuel duties as prices rose and said it should ease these duties or support farmers on energy or other costs.

“The government has to stand up and start doing stuff that helps people,” he said. He added that tax from fuel dutyshould be redistributed for “supporting farmers in some shape or form”.

Leighton, who returned to try to revive Asda 20 years after his first executive stint at the supermarket chain, said consumer confidence, which it measures every week through surveys, was “clearly going down” as a result of the conflict.

The Asda boss’s comments on inflation come after Simon Wolfson, chief executive of the fashion and homewares retailer Next, suggested that clothing prices could rise by 4% to 10% if conflict in the Middle East extends into the autumn and factories are hit by higher fuel and fabric costs.

Wolfson said Next had so far seen little disruption to its supply chain and did not expect prices to rise at all until the summer at the earliest.

Daniel Ervér, chief executive of the Swedish fashion chain H&M, has also said a prolonged conflict could have a significant impact on consumer spending and cause inflation.

The Asda chair said its George clothing and homewares business was also not disrupted, but had seen shipping costs rise.

He made the comments as he revealed underling profits at the supermarket dived by a third to £764m last year as non-fuel sales slid 3.3% to £21bn.

Sales have gone backwards, despite an effort to win over shoppers with price cuts and refurbished stores.

Asda notched up its first month of underlying sales growth in stores in almost two years in March, after it finally resolved IT problems linked to a switch away from services provided by its former owner, Walmart.

Leighton conceded that the chain’s online grocery sales continued to fall as a result of a “clunky” website. He said the struggling retailer was “edging forwards” and expected to improve its website in the next three or four months and return to profit “soon”.

He said he now had his full leadership team in place and expected eventually to pick a chief executive from the group.

“We have good momentum in the business,” he said, adding that he still believed it would take three to five years to bring about a turnaround. “These things don’t turn around overnight.”

Asda, the UK’s third largest grocery chain, which has 579 supermarkets, 517 Express convenience stores and 29 Asda Living general merchandise and fashion outlets, is on track to be overtaken by its fast-growing rival Aldi.

Asda has been struggling with debts and IT problems since a highly leveraged £6.8bn takeover in 2020 by the billionaire Issa brothers and the private equity firm TDR Capital. TDR now controls the group after buying out one of the brothers, Zuber Issa, while Mohsin Issa retains a 22.5% stake.

On Friday, Asda said net debt had fallen by £500m in the past year to £3.1bn and it had ended the year with £1.3bn in cash, which Leighton said gave the group “great optionality”. Asda has sold off and leased back stores and warehouses in order to cut debts and to fund price cuts in an attempt to win back shoppers.

Clive Black, a retail analyst at Shore Capital, said Asda’s return to sales growth since the year end was “a very welcome change”.

“Asda will be a more stable player [this year] and so not a source of such easy share gain for the rest of the trade, in a competitive but, to us, still rational sector.”