UK food firm Northern Foods has said that the sales growth will slow in the second quarter, compared to the first quarter, and warned that product costs are increasing.

Northern Foods, which makes own-label ready meals for several leading food retailers, said sales in the first quarter had increased 5.8%. Chairman Peter Blackburn said the timing of Easter had been beneficial to that sales result, reported Dow Jones International News.

The company said product costs, particularly those linked to the euro, were rising and price increases were not enough to cover them. Analysts said that further price rises would be difficult to implement because of the competitive market in which Northern Foods operates.

Blackburn said there was strong sales growth in the convenience foods business, while grocery turnover rose despite the expected weak sales of biscuits.