SYDNEY, AAP – Woolworths has reported a lower first-half profit due to coronavirus costs while boss Brad Banducci warns it is inevitable prices will increase.

The retail giant which includes Big W, supermarkets and a reduced stake in drinks business Endeavour on Wednesday declared net profit after tax down six per cent to $795 million for the 27 weeks ended January 2.

This measure is based on continuing operations and does not include the $6.3 billion gain from selling part of its Endeavour stake.

Sales were up eight per cent but Woolworths had to spend more protecting staff and customers from the coronavirus wave, which caused lengthy lockdowns on the east coast.

Australian food sales have continued to be strong to start the calendar year and were up five per cent for the first seven weeks.

Mr Banducci said inflation had forced prices up about two to three per cent.

“We expect inflationary pressures to continue to intensify due to industry-wide cost increases,” he said.

“It is inevitable prices will increase.”

Investors will receive a fully franked interim dividend of 39 cents per share. This is lower than the 53 cents per share paid about this time last year.

Investors will receive a fully franked interim dividend of 39 cents per share. This is lower than the 53 cents per share paid about this time last year.

Company shares on the ASX were up two per cent to $36.01 at 1124 AEDT.