Justin King put his foot in it with shoppers last week when he questioned whether food prices are shooting up as quickly as we think.

The J Sainsbury chief executive reckons the price of a trolleyload of groceries is rising at a little over 2% because of instore discounting – not the 6.6% annual rise the Office for National Statistics came out with.

While his customers may moan that King’s common touch has deserted him – his comments came as he pocketed a £3.5m bonus – investors are well placed to make gains from retailers as prices go up.

Food-retailing stocks traditionally perform well during periods of high inflation, along with the defence sector and tobacco. This is not the case for the wider market. Nick Nelson at UBS reckons that a one-percentage-point rise in inflation knocks 1.5 points off price-earnings multiples.

Retailers such as J Sainsbury have the cushion of selling “essentials” and can grab a share of the purse from the transport and leisure sectors. There is also an argument that supermarkets benefit in a downturn as people entertain at home more.

Countless competition inquiries have found that the Big Four – Sainsbury, Tesco, Asda and Morrisons – are not abusing their market position. However, Nelson believes they are some of the most efficient in Europe at passing on price rises to customers.

Margins are still rising at Sainsbury’s, despite campaigns such as “Feed your family for a fiver”. They are also on the up at Morrisons, aided by the first fruits of chief executive Marc Bolland’s plan to sharpen up the business.

At the other end of the food chain, suppliers are regularly asked to tighten their belts by the big grocers. There are signs there may be little more to squeeze. Northern Foods has just walked away from negotiations with Marks & Spencer over a long-term contract to supply Italian ready meals, resulting in the closure of a Lincolnshire factory.

A sector valuation of 15.5 times this year’s earnings means food retailers do not come cheap. Yet with earnings under pressure elsewhere, they offer a tasty hedge against the rigours of high inflation.

Glaxo Smith Kline

IT is the end of an era at Britain’s biggest drug maker. Jean-Pierre Garnier will finally stand down as chief executive when the pharma giant holds its annual shareholders’ meeting this Wednesday, having led the group since 2000.

After early teething troubles, he has proved an inspirational leader. Under his stewardship, Glaxo has begun to tackle the expense and efficiency of the research-and-development process, by creating smaller units dedicated to specific treatment areas.

He leaves behind a company with a healthy pipeline, with 34 drugs in final clinical testing. Glaxo has a shot at establishing itself in oncology, with more than half a dozen cancer treatments in late-stage trials.

However, if Andrew Witty, Garnier’s successor, wants to make a name for himself, he could start with reviving Glaxo’s share price.

Over the past year alone, the group has seen its value slide 21%, closing on Friday at £11.39. That values the business at £61 billion. The group’s price-earnings ratio has also wilted, with GSK valued at just 11 times next year’s earnings, not the sort of multiple expected of a company at science’s cutting edge.

james.ashton@sunday-times.co.uk

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange