UK Grocery Inflation Drops to Lowest Monthly Rate But Still ‘Pretty Painful’: Report

A customer shops for vegetables in the fruit and vegetable section of a Sainsbury's supermarket in east London on Feb. 20, 2023. (Daniel Leal/AFP via Getty Images)

Grocery price inflation has fallen to its lowest rate this year, bringing slight relief to British consumers, according to UK market research analysts.

Grocery inflation sits at 16.5 percent for the four weeks to June 11, which is its lowest level since last year. However, analysts at the data analytics company Kantar have warned that the 16.5 percent figure is still the sixth highest monthly figure in the past 15 years.

The drop in grocery inflation “isn’t something to celebrate,” the company’s report said. Fraser McKevitt, head of retail and consumer insight at Kantar, said that grocery price inflation at 16.5 percent is “still pretty painful.”

The nominal impact on grocery spending if habits don’t change still stands at more than £805 per household, said McKevitt.

A pressure group survey conducted by Kantar has shown that the majority of consumers are worried about rising grocery prices.

“Nearly 70 percent of households are either ‘extremely’ or ‘very worried’ about food and drink inflation compared to just over two thirds when asked the same question in January. It remains the second most significant concern, narrowly behind rising energy bills,” the report said.

High prices are affecting what and how people eat, with consumers opting for cheapest value product ranges and choosing to cook meals with fewer ingredients. In a shift to simpler cooking, data showed that people were increasingly using microwaves to prepare food, as opposed to oven meals.

“There were 4 percent fewer meals made using an oven according to our most recent 12-week data compared to the same period last year, while microwaved meals rose by 8 percent. We also saw a reduction in hob use and a rise in food prepared with toasters and grills,” the report said.

With the summer weather kicking in, UK shoppers turn more to products such as ice cream, mineral water and barbeque foods. The report recorded an “increased cost of staying cool,” which “will have come as a shock for many.”

While volumes of sales of ice cream and mineral water went up by 25 percent and 8 percent respectively in May, the prices on these products went up 20 percent 17 percent. Barbeque lovers saw the price on fresh sausages rise by 16 percent and by 13 percent on fresh burgers.

Supermarket Sales

Meanwhile, total spending on the cheapest own-label lines soared by 41 percent in comparison to 2022. Retailers have been matching the increased demand, which has led to the popular value tier becoming the fastest growing part of the market every month since June 2022.

Supermarkets Aldi, Lidl, Morrisons, Sainsburys, Asda, and Co-op have all shown an increase in sales, according to the report.

Aldi’s sales rose by 24.6 percent in the 12 weeks to June 11, with Lidl just a step behind with 23.2 percent. In a “modest” rise, sales at Morrisons increased by 0.8 percent, but its Savers range is Britain’s fastest growing value line, analysts said.

Sainsbury’s and Asda’s sales both grew at 10.0 percent, now accounting for 14.9 percent and 13.7 percent of total sales respectively. Co-op sales rose by 3.8 percent.

A 10.8 percent rise in take-home grocery sales has been recorded over the month in comparison with the same period last year.

The UK grocery market share update has suggested that food prices should continue falling in the coming months, “a welcome result for everyone,” the report said.

Prime Minister Rishi Sunak said he has been “working day in and day out” trying to tackle high inflation rates for many months, with the aim to halve the current 8.7 percent rate.

In April, the UK inflation rate dropped for the first time in eight months, but prices on basic essentials remain high.