As the cost of living issue continues to bite, shoppers in Britain have seen their grocery expenditures rise at the quickest pace since at least 2008, with the largest price increases on dog food, butter, milk, and poultry.
According to research company Kantar, yearly food price inflation in UK supermarkets increased to 11.6% during the four weeks leading up to August 7 compared to the same time last year, up from 9.9% in the previous month.
The rate, which amounts to a £533 yearly rise in the typical UK household’s food bill or £10.25 per week, is the greatest since the business began monitoring supermarket pricing in this manner 14 years ago.
As a consequence of consumers looking to save money, it stated that sales of own-label value items rose by almost a fifth, or 19.7%. It happened at a time when total supermarket sales increased by 2.2% in the 12 weeks ending on August 7.
In those 12 weeks, the price of butter increased by 25.1%, more than dog food (23.6%) or milk (23.5%). In light of the heat, mineral water sales increased by 23% over the previous four weeks, according to Kantar.
Since a result of the cost-of-living squeeze, consumers now seem to be doing more comparison shopping and moving supermarkets, as inflation has risen to 9.4% and is predicted to reach 13.3%, according to forecasts from the Bank of England.
With sales climbing 17.9% over the previous 12 weeks, Kantar said that Lidl was once again the grocery chain with the strongest growth. Competitor German discounter Aldi also did well, with 14.4% growth.
Customers were drawn to the cheaper product lines offered by the two companies, although Tesco, the best performer among the UK’s largest supermarkets, also had a positive time with a 1% gain.
While Sainsbury’s saw sales decline by 0.1% and Asda’s sales rise by 0.2%, respectively. Morrisons had the poorest performance of the big four, with sales falling by 4.9%.
As anticipated, we’ve now reached a new high in food price inflation, with items like butter, milk, and chicken in particular experiencing some of the greatest hikes, according to Fraser McKevitt, head of retail and consumer research at Kantar.
If people purchase the same things as they did last year, the average yearly shop would jump by a startling £533, or £10.25, according to the report.
It’s hardly surprising that consumers are altering their lifestyles to cope with the increased demands placed on their family finances.
According to the study, the recent hot weather also caused a spike in sales of soft beverages, ice cream, and summer clothing.
As the temperature rises, Mr. McKevitt said, “Shoppers are turning to mineral water and soft drinks to stay cool. Sales of both goods have increased during the last four weeks by 23% and 10%, respectively.
Unsurprisingly, ice cream is also quite popular, with an increase of 4% from the previous month and an increase of 18% year over year.
Since there are no longer any constraints on travel or outdoor activity, we are also extending our summer outfits in response to the changing weather.
Shorts, sundresses, hats, and swimming costumes are among the summer clothing items that have seen a 163% increase in sales.
With sales increasing by 7.3% and holding 51.6% of the market when compared to branded products, own-label ranges are now more popular than ever before, according to Kantar.
Comparisons to the previous financial crisis are starting to be seen, according to Kantar, with inflation so high and a possible recession on the horizon.
People are comparing prices between retailers to find the best deals on goods, but in 2008, there was a lot more reliance on promotions, Mr. McKevitt continued.
The number of products sold on promotion is at 24.7% for the four weeks leading up to August 7, 2022, down from 30% 14 years ago, making it more difficult to find these bargains.
Instead, supermarkets are currently directing customers to their consistently low prices, value selections, and price matches.
In order to meet customer demand, retailers have increased and promoted their own value ranges throughout the store over the past month.
Sales of own-label value products have increased by 19.7% this month, indicating that consumers are appreciating the variety of options and choices that are being made available to them on the shelves.
For instance, the Just Essentials collection from Asda, which debuted this summer, is currently included in 33% of its customers’ baskets.
The success of its bakery and dairy product lines has helped Lidl increase its market share to 7%. The retailer experienced its highest 12-week growth rate of 17.9% since September 2017.
Aldi’s market share increased by 0.9 percentage points to 9.1%.
Together, Lidl and Aldi have increased their share of British grocery sales by 1.8% over the course of the period, amounting to a £2.3 billion annual shift in consumer spending in their favour.
According to Kantar, annual foot traffic has increased in stores while it has decreased online.
Since March 2020, shoppers have visited the store more frequently, according to Mr. McKevitt. It makes sense that this would have an effect on the online grocery market, as its overall share has decreased to 11.8%.
Since the start of the pandemic in May 2020, this is the first time online’s share has fallen below 12%. Nevertheless, 5.4 million households, or 19% of the UK population, placed an online order in the last four weeks.
Ocado, on the other hand, defied the general decline in online sales by expanding by 6.2% as a result of luring new customers outside of its core market.
Sales at Co-op increased by 0.4%, while sales at Iceland increased by 2.8%.
According to Kantar, the grocery price inflation figure is based on a comparison of more than 75,000 identical products in the proportions bought by British consumers over a 12-month period.
Shopping behaviour is held constant between the two comparison periods, making it a “pure” inflation measure. Shoppers are more likely to experience a lower personal inflation rate if they trade down or look for better deals.
The sales of food and beverages that are consumed outside the home, such as snacks and meals while travelling or working, are not included in the market share statistics for groceries.