UK Consumers Dealing With Record High Inflation at the Grocery Store

A customer at the fruit and vegetable section at a Sainsbury's supermarket in Walthamstow, east London, on Feb. 13, 2022. (Tolga Akmen/AFP via Getty Images)

Grocery prices in the United Kingdom have hit another record high, adding more than 837 pounds ($1,030) a year to average household food bills, according to market research firm Kantar.

Supermarket prices climbed to reach an inflation rate of 17.5 percent over the four weeks to March 19, Kantar said—up from 17.1 percent in February, and marking the highest reading since records began in 2008—with the cost of eggs, milk, sugar, and cheese rising fastest amid a cost-of-living crisis.

Experts warned that UK consumers face splashing out hundreds of pounds extra each year if they don’t change their shopping behaviors.

“Unfortunately, it’s more bad news for the British public, who are experiencing the ninth month of double-digit grocery price inflation,” said Fraser McKevitt, Kantar’s head of retail and consumer insight, in a statement.

“The supermarkets are also tackling grocery price inflation, battling it out to demonstrate value and get customers through their doors. This is a fiercely competitive sector and if people don’t like the prices in one store they will go elsewhere, with consumers visiting three or more of the top 10 retailers in any given month on average,” McKevitt added.

Kantar said that data showed that shoppers are increasingly turning to discounted supermarket label lines in an effort to cut down on spending, with sales of those products up 15.8 percent during the latest four weeks compared with last year.

However, experts noted that consumers are still “keeping some space in their baskets for the brands they know and love.”

Outside of discounters Aldi and Lidl, branded goods still make up 52 percent of the market, and sales grew by 7.2 percent over the past month, the fastest rate since February 2021.

Food Prices to Ease in Coming Months

Discounter Lidl was the fastest-growing supermarket with its sales up 25.8 percent over the 12-week period ending March 19, while sales at rival Aldi were up 25.4 percent.

Asda’s sales increased by 7.3 percent, just ahead of both Tesco and Sainsbury’s at 6.9 percent. Morrisons also saw a “welcome return to growth” with sales rising by 0.1 percent, and Waitrose also saw sales up by 2.1 percent.

Overall, take-home grocery sales grew by 8.6 percent over the 12-week period, the data showed.

Separate data published by the British Retail Consortium (BRC) and market researcher NielsenIQ on March 28 showed food prices hit a new high in March, with overall shop price inflation rising to 8.9 percent, up from 8.4 percent in February.

Food inflation accelerated to 15 percent in March, up from 14.5 percent in February. That is the highest cost increase since the BRC began recording price rises in 2005.

According to the BRC, shortages of fruit and vegetables—prompted by poor harvests in Europe and North Africa and rising import fees—further drove up prices. Those shortages have also been hampered by the rising costs of energy needed to grow produce out of season in greenhouses across the country.

Helen Dickinson, the BRC’s chief executive, warned that while food prices may ease in the coming months as the UK enters its growing season, wider inflation will likely remain high.

“Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups,” Dickinson said. “Government must also minimize oncoming regulatory burdens, as these will serve as a drag on investment and will ultimately contribute to higher prices for UK consumers.”

Union Blames Profiteering

The latest figures paint an even more gloomy picture of the UK economy after the Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) jumped to 10.4 percent in the 12 months to February 2023, up from 10.1 percent in January.

Those figures were no doubt disappointing to economists, who had anticipated CPI to fall to 9.9 percent in February.

Overall inflation for food and nonalcoholic drinks rose to 18 percent, up from 16.8 percent in January and the highest since August 1977, according to ONS data.

ONS also attributed the jump, in part, to shortages of fruits and vegetables as well as higher food and drink prices in pubs and restaurants. However, the UK'S biggest union, Unite, has placed the blame on food manufacturers and retailers.

“Inflation is back on the rise and workers continue to be hammered by high prices,” Unite general secretary Sharon Graham said in a statement on March 22. “Unite’s own research shows that it’s profits propelling inflation, while workers’ wages struggle to keep up.”

According to Unite, which is currently pushing for higher pay and better working conditions, three of the UK’s biggest supermarket chains—Tesco, Sainsbury’s, and Asda—made combined profits of 3.2 billion pounds ($3.9 billion) in 2021 during the pandemic.

“It’s no wonder workers are struggling with rising food prices,” Graham said. “There’s no end in sight to the cost of living crisis and people are sick of seeing their budgets get stretched thinner and thinner every month while big business racks up record profits.”