Grocery price inflation hits 11.6% over past four weeks – highest since 2008

Grocery price inflation in the UK has hit 11.6% over the past four weeks, the highest level since 2008.

Market research firm Kantar said “we have hit a new peak in grocery price inflation, with products like butter, milk and poultry, in particular, seeing some of the biggest jumps.”

The Managing Director of Deeside-based Iceland has said increasing food costs are “going to be a challenge for all of us for quite some time.”

According to Kantar, the average annual shop is set to rise by a massive £533, or £10.25 every week, if consumers buy the same products as they did last year.

“It’s not surprising that we’re seeing shoppers make lifestyle changes to deal with the extra demands on their household budgets.” Said Frazer McKevitt Head of Retail and Consumer Insight at Kantar said.

Own-label ranges are at record levels of popularity, with sales rising by 7.3% and holding 51.6% of the market compared with branded products, the biggest share we’ve ever recorded.

“With inflation high and a potential recession later this year, comparisons against the last financial crisis are becoming visible.”

“People are shopping around between the retailers to find the best value products, but back in 2008 there was much more of a reliance on promotions.” Frazer said.

The market researcher said it is harder to hunt out these deals in 2022 – the number of products sold on promotion is at 24.7% for the four weeks to 7 August 2022, while 14 years ago – when Kantar started tracking supermarket prices – it was at 30%.

“Instead, supermarkets are currently pointing shoppers towards their everyday low prices, value-ranges and price matches instead.”

“Over the past month we’ve really seen retailers expand and advertise their own value ranges across the store to reflect demand.”

“Consumers are welcoming the different choices and options being made available to them on the shelves, with sales of own-label value products increasing by 19.7% this month.”

“As an example, Asda’s Just Essentials line, which launched this summer, is already in 33% of its customers’ baskets. ” Frazer said.

The Bank of England said inflation would peak at 13.3% in October, the highest since 1980, it is being driven in part by rising energy costs and supply chain disruptions.

Speaking to BBC Breakfast this morning, Iceland’s Richard Walker said:

“We’re seeing it in consumers switching to more value-orientated lines and really watching every penny.”

“I think it’s gonna be really tough because of the war in Ukraine and commodity price inflation and everything else in between.”

“Now we have a drought in this country which is going to affect crop yields in September and October, it is one thing after another.”

“Food inflation officially is now around 10%, of course, it’s much higher than that and people are seeing that in terms of the price of milk, etc.”

“I think, unfortunately, this is going to be a challenge for all of us for quite some time.”

Lidl remains the fastest growing grocer, with sales up by 17.9% over the latest 12 weeks, raising its market share to 7%.

Boosted by the popularity of its dairy goods and bakery lines, this is the retailer’s highest rate of growth since September 2017.

Aldi also performed strongly, and its market share increased by 0.9 percentage points to 9.1%.

Together Lidl and Aldi have gained 1.8 percent of British grocery sales over this period, representing a £2.3 billion annual shift in spending towards the discounters.

Annual footfall has continued to pick up in store while online shopping declines.

Shoppers have made the most trips into store since March 2020.

This is understandably impacting the online grocery market, and its total share has dropped to 11.8%.

This is the first time online’s share has dipped below 12% since the early days of the pandemic in May 2020.

Even so, 19% of the UK population still made an online order during the past four weeks, the equivalent to 5.4 million households.