Grocery inflation slowed to its lowest level since September 2021, according to industry data from Kantar Worldpanel. The measure of grocery inflation decreased to 1.6% in the four weeks to 7 July from 2.1% the previous month. This marks the 17th consecutive decline in the monthly rate, following the peak seen in the months after Russia’s invasion of Ukraine.
Kantar reported that prices were rising the most in markets such as vitamins, minerals, supplements, and chilled fruit juices. On the other hand, prices were falling the fastest in categories such as toilet rolls, butter, and dog food. The decline in inflation can also be attributed to increased competition between supermarkets, driven by promotions targeting football fans during Euro 2024.
The report highlighted that trips to the supermarket were 2% higher over the four-week period compared to the same time last year. This could be due to fans of both England and Scotland stocking up for group games and, more recently, England’s quarter-final against Switzerland, which was the last match day for which data was available. Fraser McKevitt, head of retail and consumer insight at Kantar, stated: “England’s hopes might have been dashed on Sunday, but there was still some cause for celebration in the grocery industry.”
McKevitt also noted that beer sales increased by an average of 13% on days when the England men’s team played, compared to the same day the previous week. Sales of crisps and snacks also saw a boost, increasing by 5% compared to the previous month. However, with some matches being played on weekdays, some Britons chose moderation, leading to a 38% increase in spending on no and low-alcohol beer on match days.
Kantar has previously credited promotional activity for boosting sales and slowing inflation, with peak discount activity occurring during Christmas. Additional data revealed that 44% of alcohol sales during the last four-week period were on promotion, further supporting the idea that promotions played a role in the easing of grocery inflation. Alcohol typically accounts for 10% of all supermarket sales.
The release of this data comes just 24 hours before official inflation figures for June are released. Economists are predicting that the consumer prices index measure will decrease to 1.9% from 2% the previous month. However, opinions in the financial market are divided on whether the Bank of England will see enough evidence from the inflation data, followed by employment figures, to justify an interest rate cut on 1 August. Policymakers are looking for indications that services inflation and wage growth are slowing down before making any decisions.
