Food price inflation in UK falls for fifth month in a row

Food price inflation in the UK eased to 12.7% last month, marking the second consecutive substantial decline. The price of milk decreased, but eggs, confectionery, and oven chips sustained their upward trajectory.

Over the past five months leading up to August 6, price hikes decelerated. This data, conveyed by market research entity Kantar on Tuesday, revealed a noteworthy trend.

Fraser McKevitt, the head of retail and consumer insight at Kantar, reported that the pace of price increases diminished by 2.2 percentage points, constituting the second most significant month-to-month decline in inflation since 2008.

“Prices remain elevated year-on-year across all supermarket categories. However, customers will have found solace in observing the cost of fundamental goods beginning to recede compared to earlier in 2023. Shoppers paid £1.50 for a four-pint carton of milk last month, a reduction from £1.69 in March. Meanwhile, the average price of a litre of sunflower oil is presently £2.19, a decrease of 22 pence from spring,” stated McKevitt.

In response to inflation’s impact, consumers have embraced supermarket own-brand items to balance their household budgets. During the four-week period, sales of own-label products surged by 9.7%, outpacing the 6.4% growth in branded goods.

Consumer advocacy group Which? has urged supermarkets to enhance the availability of their most affordable own-label products in smaller local outlets. Its findings indicated that certain branded food and beverage items at supermarkets exhibited over a twofold price increase in the past year.

Mr Kipling chocolate slices and bakewell cake slices headed the list of escalated prices, surging by 129.4% and 98% respectively in a year. Yeo Valley yoghurts, Quaker porridge products, and Tropicana orange juice also witnessed increases of over 55%.

The pursuit of better deals boosted Aldi and Lidl, discount retailers who continued to amass a larger share of expenditure compared to their competitors. According to Kantar, in the 12 weeks leading to August 6, Aldi’s sales rose by 21.2% and Lidl’s by 19.8%. In contrast, Tesco, the most rapidly growing traditional chain, experienced a 9.5% increase.

McKevitt indicated that this change in behavior led to a mere £5.13 increment in households’ weekly grocery expenditure compared to the previous year. This was significantly lower than the potential £11.27 hike if shoppers had adhered to their previous year’s purchasing patterns.

Unseasonably cold and damp weather prompted shoppers to pivot away from typical summer fare towards autumnal items like soups and roasting joints, which saw sales rise by 16% and 5% respectively. Ice cream sales plummeted by 30%, and soft drink purchases declined by nearly a fifth compared to the previous year when the UK experienced warm, sunny weather. Halloumi, now a staple at barbecues, experienced a 27% reduction in sales.

The inclement weather impacted supermarket spending, with growth in at-home grocery purchases dropping from 10.4% to 6.5% in the four weeks leading up to August 6, as compared to the preceding month.

Morrisons struggled to achieve sales growth, with a modest increase of 2.3%, performing worse than online specialist Ocado and independent retailers.