UK shoppers have seen their grocery bills rise at the fastest rate since at least 2008 as the cost of living crisis continues to bite – with dog food, butter, milk and poultry the biggest price rises.
Research firm Kantar revealed that annual grocery price inflation in UK supermarkets rose to 11.6 per cent in the four weeks to August 7 compared with the same period last month, up from 9.9 per cent in the previous month.
It is the highest since the company began tracking supermarket prices in this way 14 years ago – and equates to a £533 annual increase in the average UK household’s grocery bill, or £10.25 each week.
As a result, it reported sales of its own-label price products rose by nearly a fifth — 19.7 percent — as customers sought savings. Overall supermarket sales were up 2.2 per cent in the 12 weeks to August 7.
In those 12 weeks, butter prices rose 25.1 percent, followed by dog food by 23.6 percent and milk by 23.5 percent. Kantar said mineral water has increased by 23 percent during the hot weather in the last four weeks.
Consumers are now shopping more and switching supermarkets to reduce the cost of living, with inflation at 9.4 per cent and forecast to reach 13.3 per cent, according to Bank of England estimates.
A customer shops at a supermarket in London on July 20 as UK inflation is now at a 40-year high of 9.4 percent
Grocery market share data for the 12 weeks ending August 7, 2022 shows Tesco still leading by some distance
|Total Till Roll – Consumer Expenditure||12 weeks to 8/8/2021 (£m)||share (%)||12 weeks to 7/8/2022 (£m)||share (%)||Year Change (%)|
|Symbols and Independents||519||1.80%||494||1.60%||-4.80%|
Kantar said Lidl was once again the fastest growing supermarket chain, with sales up 17.9 per cent over the past 12 weeks. Rival German discounter Aldi also performed strongly, reporting 14.4 percent growth.
While customers were drawn to the two firms’ cheaper product lines, it was also a good period for Tesco, which was the strongest performer among Britain’s biggest grocers and reported 1 percent growth.
Workers took record pay cuts amid high inflation
UK workers saw their pay fall behind inflation at record levels last quarter, according to official figures.
The Office for National Statistics (ONS) reported that regular wages, excluding bonuses, increased by 4.7 percent in the three months to June. Analysts had forecast wages to rise by 4.5 percent.
It comes after CPI inflation hit a new 40-year record of 9.4 percent in June and is expected to rise even higher later this year.
The ONS said it saw a 4.1 per cent fall in regular pay for employees once CPI inflation is taken into account, representing the biggest drop since records began in 2001.
Official figures also showed that the number of British workers on the payroll rose by 73,000 between June and July to 29.7 million.
Meanwhile, the unemployment rate rose to 3.8 percent in the quarter compared to 3.7 percent in the previous period.
Darren Morgan, director of economic statistics at the ONS, said: ‘The number of people in work rose in the second quarter of 2022, while the headlines for unemployment and people not working and looking for work were little changed.
‘Meanwhile, the total number of hours worked each week appears to have stabilized slightly below pre-pandemic levels. Redundancies are still at very low levels. However, although the number of job vacancies has historically been very high, it has declined for the first time since the summer of 2020.’
Job vacancies fell by 19,800 to 1.274 million in the three months to May to July, in the first sign that Britain’s hot labor market may be cooling.
Chancellor Nadim Zahawi said: ‘Today’s figures show that the job market is in a strong position, with unemployment lower than at any point in the last 40 years – good news in what I know are difficult times for people. It highlights the resilience of the UK economy and the fantastic businesses that are creating new jobs across the country.’
Meanwhile, Asda saw sales rise by 0.2 per cent and Sainsbury’s fell by 0.1 per cent. The worst performer of the big four was Morrisons, which saw sales fall by 4.9 per cent.
Fraser McKevitt, head of retail and consumer insights at Kantar, said: ‘As predicted, we have now reached a new peak in grocery price inflation, with some big jumps in products such as butter, milk and poultry in particular.
‘This increase means the average annual shopper will increase by £533 per week, or £10.25 if consumers buy the same products as last year.
‘It’s no wonder we’re seeing shoppers make lifestyle changes to cope with the increased demands on their household budgets.’
Research has shown that the sales of soft drinks, ice cream and summer clothes have also increased during the last summer season.
Mr McKevitt added: ‘As the mercury rises, shoppers are turning to mineral water and soft drinks to cool down. In the last four weeks, sales of both the products have increased by 23 percent and 10 percent respectively.
‘Surprisingly, ice creams are also popular with 18 per cent year-on-year growth, up four percentage points from the previous month.
‘Adapting to the changing temperatures, we are also expanding our summer wardrobes, now there are no restrictions on traveling or going out. Sales of clothing aimed at summer holidays such as shorts, sundresses, hats and swimwear increased by 163 per cent.’
Own label ranges are now at record levels of popularity, with sales up 7.3 per cent and occupying 51.6 per cent of the market compared to branded products, the biggest share Kantar has ever recorded.
Kantar said the situation is comparable to the last financial crisis, with inflation so high and on the way to a possible recession.
Mr McKevitt added: ‘People are shopping between retailers to find the best value products, but in 2008 there was too much reliance on promotions.
‘These deals are hard to find in 2022 – the number of products sold on promotion is at 24.7 per cent for the four weeks to August 7, 2022, compared to 30 per cent 14 years ago.
Instead, supermarkets are now pointing shoppers towards their everyday low prices, price-ranges and price matches.
‘Over the last month we’ve really seen retailers expand and advertise their own price ranges in store to reflect demand. With sales of own-label products up 19.7 percent this month, consumers are welcoming more choices and options on shelves.
‘For example, Asda’s Just Essentials line, which launched this summer, is already in 33 per cent of its customers’ baskets.’
Lidl, which has now grown its market share to 7 percent, has been boosted by the popularity of its dairy goods and bakery lines. Its 17.9 percent growth figure over the last 12 weeks is the retailer’s highest since September 2017.
Aldi also increased its market share by 0.9 percentage points to 9.1 percent.
Lidl and Aldi accounted for 1.8 per cent of British grocery sales during the period, representing £2.3 billion a year spent on discounters.
Kantar said that while online shopping is decreasing, the annual traffic in stores continues to increase.
Lidl, which has now grown its market share to 7 percent, has been boosted by the popularity of its dairy products and bakery.
Mr McKevitt said: ‘Shoppers made the most trips to the store since March 2020. This is affecting the online grocery market, and its overall share has dropped to 11.8 percent.
This is the first time that online shares have fallen below 12 percent since the beginning of the pandemic in May 2020. However, 19 percent of the UK population still ordered online in the past four weeks, which equates to 5.4. lakh households.’
However Ocado bucked the decline in overall online sales, which rose 6.2 per cent as it attracted new shoppers outside its traditional demographic.
Co-op sales increased by 0.4 percent, while Iceland’s grew by 2.8 percent.
The grocery price inflation figures are based on more than 75,000 similar products compared year-on-year to the proportion bought by British shoppers, which Kantar represents the most official figures available.
It is a ‘pure’ inflation measure showing that shopping behavior has been held constant between two comparison periods – shoppers are likely to get a lower personal inflation rate if they shop less or look for more offers.
The grocery market share numbers do not include sales of food or beverages consumed outside the home, for example snacks and meals while traveling or at work.