Inflation to raise UK food bills by £454 this year

THE latest take-home grocery figures from Kantar show that supermarket sales rose by 0.1 per cent in the 12 weeks to July 10, 2022. This is the first time the market has registered growth since April last year. Supply chain issues have driven costs up across the industry and like-for-like grocery price inflation now stands at 9.9 per cent over the past four weeks.

Fraser McKevitt, head of retail and consumer insight at Kantar, said, “Grocery prices continue to soar to near record-breaking heights and have jumped by another 1.6 percentage points since last month. This is the second highest level of grocery inflation that we’ve seen since we started tracking prices in this way in 2008 and we’re likely to surpass the previous high come August. With grocery price inflation at almost 10 per cent, people are now facing a £454 increase to their annual grocery bills.

“All this means that people will be feeling the pinch during our first restriction-free summer since 2019. Taking a barbecue as an example, buying burgers, halloumi and coleslaw for some al fresco dining would cost you 13%, 17 per cent and 14 per cent more than it would have this time last year. Buying enough for a typical family barbecue, shoppers will have to put aside £9.94 rather than the £9.01 they spent last year*.”

As prices rise, shoppers are adjusting their behaviour.

"People are increasingly turning to own-label products to drive down the cost of their weekly shop. Supermarkets’ own lines are growing by 4.1 per cent this period, while sales of branded items have fallen by 2.4 per cent. It’s a complex picture and the grocers are busy negotiating with their suppliers to mitigate impact at the tills as far as possible. We’ve seen this play out in the headlines in recent weeks, with some well-known brands temporarily disappearing from supermarket shelves over pricing disputes," McKevitt added.

While consumers grapple with rising grocery bills, average temperatures across Great Britain have also been climbing to new highs.

McKevitt said, “There has been plenty of noise around the extreme heat sweeping across the country and we can definitely see people preparing to stay cool in the latest data. Over the past four weeks, sales of ice cream and suncare products soared by 14 per cent and 66 per cent. In July 2019, the last time we faced a heatwave like this, sales of fans, paddling pools and reusable water bottles grew by 107 per cent, 169 per cent and 17 per cent respectively**. This added up to a combined total of £10.9 million extra spent during the hottest week on just those three categories, and we expect to see similar if not even bigger numbers this time around.”

Lidl was the fastest-growing supermarket again this period, with sales up by 13.9 per cent. Aldi was also in double-digit growth, boosting its sales by 11.3 per cent compared with last year.

McKevitt said, “Over 67 per cent of people in Britain shopped in either an Aldi or a Lidl in the past 12 weeks, with 1.4 million additional households visiting at least one of the discounters in the latest three months compared with last year. Both retailers reached a new market share high over the past three months. Lidl now holds 7.0 per cent of the market while Aldi climbed to a 9.1 per cent share.”

Tesco returned to growth this period for the first time since October, the retailer boosted its sales by 0.1 per cent and retained a market share of 27.1 per cent. Ocado was the only other retailer in growth, holding its market share steady at 1.8 per cent while its sales were up 0.7 per cent.

Sainsbury’s holds 14.9 per cent of the market, followed by Asda at 13.7 per cent, and Morrisons 9.4 per cent. Co-op achieved a 6.3 per cent market share this period and Waitrose stands at 4.6 per cent. Frozen food specialist Iceland held its market share flat at 2.3 per cent.