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May 28, 2023

A quarter of British shoppers struggle as grocery prices soar

Households paying £811 a year more on grocery bills than 12 months ago, says

Households paying £811 a year more on grocery bills than 12 months ago, says research firm Kantar

A quarter of British people say they are struggling financially as fresh food inflation hits the highest level on record after the weakening pound made imports from Europe more expensive.

Shop price inflation rose to a fresh high of 8.4% in February, up from 8% in January, according to the British Retail Consortium (BRC), driven by new highs in the cost of food. Fresh food prices rose to 16.3% amid shortages of staples such as tomatoes and broccoli, as poor weather in southern Spain and north Africa combined with higher costs for glasshouse growers in the UK and the Netherlands.

Helen Dickinson, the chief executive of the BRC, said shoppers should not expect to see a fall in prices any time soon. "Shop price inflation rose to another record high as retail prices across the board continued to react to the impact of soaring energy bills, higher running costs and tougher trading conditions brought about by the war in Ukraine," she said.

"For non-food products, these factors particularly impacted gardening tools and pet food. Meanwhile, fresh food prices, especially vegetables, were also affected by a weaker pound, making produce imports from Europe more expensive.

"While we expect to see the annual inflation rate reduce in the second half of this year, retail prices will remain high over the coming months."

It came as the market research firm Kantar reported a quarter of British people were struggling financially, compared with 20% a year ago.

The firm calculated that households who had not changed their shopping habits were spending £811 a year more on grocery bills than 12 months previously.

Fraser McKevitt, the head of retail and consumer insight at the data analytics firm Kantar, said people were adapting by buying more supermarket own-label goods and visiting discounters such as Aldi and Lidl more often.

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Sales of own-label lines rose by 13.2% in February, well ahead of branded products at 4.6%, and McKevitt said this was "a trend that shows little sign of stopping".

Grocery inflation reached a new high, led by milk, eggs and margarine, with the higher price on basics adding to pressure on households already affected by increased energy bills and higher rents or mortgage rates.

Aldi was the fastest growing grocery chain in the UK, said Kantar, with sales up almost 27%, closely followed by Lidl with growth of just over 25%. In contrast, all the other chains reported growth behind the rate of inflation while Morrisons sales slid almost 1% as the chain continued to struggle. Waitrose booked its first period of growth in almost 18 months.

Overall grocery sales for the UK rose 8.1% in the 12 weeks to 20 February as families bought fewer items or changed behaviour to limit their bills.

Tim Steiner, the chief executive of Ocado, where sales rose 7.6% in the three-month period according to Kantar, said grocery retailers benefited from changing behaviour as people switched from dining out to cooking at home more.

The popularity of Valentine's Day treats suggest many couples followed Steiner's logic. Sales of steak in supermarkets rose by a quarter in the seven days to 14 February compared with the previous week, while chilled ready-meal sales were nearly one-third higher. Sparkling wine sales doubled.