Grocery inflation has seen an increase for the first time since March 2023, according to recently released industry data. The latest research from Kantar Worldpanel shows that prices in food shops rose by 1.8% in the four weeks leading up to 4 August.
This marks a significant change from the previous 17 months, which saw a continuous decrease in inflation rates in the grocery sector, including a drop to 1.6% in the previous month. The rise in prices was seen across various categories, with vitamins, supplements, drinks, and chocolate being among the goods that experienced the fastest price increases.
The research, which analyzed the purchasing habits of 30,000 UK households, also noted a surge in spending on drinks and snacks during major events such as the Euros football tournament and the Olympic Games. Wine sales rose by 35%, while nuts and crisps saw increases of 60% and 10%, respectively, during the opening ceremony in Paris compared to the previous week. On the day of the Euros final between England and Spain, fans spent approximately £10m on beer alone, making it the highest amount spent on a Sunday in over three years.
Fraser McKevitt, Kantar’s head of retail and consumer insight, commented on the rise in grocery inflation, saying, “Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly. While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.”
In other business news, a recent study has found that the threat of rioting contributed to a nationwide drop in sales. Meanwhile, a former UK Prime Minister has been approached about a potential role at a major news publication, and city bosses’ pay has hit a record high.
The recent warmer weather has also had an impact on grocery sales, with barbecue favorites such as burgers seeing a 32% increase in sales compared to last year. Ice cream sales also saw a significant jump of 23%. However, amid concerns of a summer COVID wave, sales of cough lozenges have increased by 28%.
Kantar reports a mixed picture when it comes to price changes for different items. Kitchen towels are now 7% cheaper than they were last year, and the cost of baked beans has also dropped by 5%. Bottled colas and dog food prices have also seen decreases.
Mr. McKevitt added, “With this kind of pricing spread, shoppers will find that the type of product they’re putting in their baskets will really dictate how much they pay. They’re continuing to take advantage of the wide range of promotions being offered by grocers to help keep the price of shopping down. Spending on deals rose by 15%, while sales of products at their usual price saw no increase.”
Overall, total take-home grocery sales saw an increase of 3.8% during the four-week period. In May, the official rate of inflation fell to the Bank of England’s target of 2% for the first time in nearly three years. It remained steady at the same rate in June, leading to the Bank’s decision to cut interest rates by a quarter percentage point to 5% earlier this month. The Office for National Statistics is set to release its latest inflation figures for July on Wednesday, which will likely influence the Bank’s decision on whether to cut interest rates again. Financial markets have already priced in expectations that a reduction is more likely to happen in November rather than September.
