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Supermarket prices surge as cost pressures bite

Grocery price inflation has surged to a 14-month high, industry data showed on Tuesday, further squeezing already under-pressure household finances.
According to retail consultancy Kantar, like-for-like grocery price inflation was 2.1% in the four weeks to 31 October. In the 12 weeks to October end, it was 1.5%.

Prices were rising fastest in savoury snacks, canned colas and crisps, and falling in bacon, fresh vegetables and cat and dog treats.

Retailers are increasingly looking to offset higher transport, fuel, labour and energy costs by putting up prices. Last month Bank of England chief economist Huw Pill warned that inflation could top 5% early next year, although the Monetary Policy Committee surprised some when it left interest rates at 0.1% at its November meeting.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocery prices are rising, and this month inflation hit its highest rate since August 2020, when retailers were still cutting promotions to maintain stock on the shelves.

“As prices increase in certain categories, we can expect shoppers to continue to visit several supermarkets and shop around. Already, households visit an average of 3.3 supermarkets per month to find the best value for money.”

Supermarket sales fell 1.9% in the 12 weeks to 31 October, Kantar said, although they remained 7.3% higher than the comparable period in 2019. Online sales accounted for 12.4% of the total grocery market for the second consecutive month.

Demand for Christmas items was particularly strong, with 4.7m households buying mince pies and frozen poultry sales up 27% year-on-year.

McKevitt said: “Our shopping habits are beginning to settle at a new baselines, as we’ve adapted our lifestyles through the pandemic. The general trend towards bigger, less frequent trips to the supermarket seems set to stay.

“Online sales have also levelled out.”

Among individual grocers, only Tesco achieved year-on-year sales growth, inching ahead 0.3% in the 12 weeks to October end, giving it a market share of 27.6%. Apart from discounter Lidl – which reported flat sales – all other supermarkets saw sales fall.

Sales at J Sainsbury’s declined 2.8%, at Asda 2.3% and at Wm Morrisons by 4.3%. Waitrose sales were 2.7% lower, while frozen food specialist Iceland saw sales decline 3.9%, although its market share was unchanged at 2.3%.

Online retailer Ocado saw its sales slip 2.1% year-on-year.

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