The latest industry data has revealed that grocery inflation has decreased for the 16th consecutive month. This information comes just ahead of the general election and also coincides with a price war aimed at attracting customers during Euro 2024.
According to Kantar Worldpanel, which tracks supermarket prices, sales, and market share, the measure of grocery inflation slowed to 2.1% in the four weeks leading up to June 9th. This is a decrease from the previous month’s rate of 2.4%. It is also the lowest level seen since October of 2021, when the war in Ukraine caused a significant rise in prices at the tills.
The report also showed that certain items, such as chilled fruit juices, vitamins and supplements, and chocolate confectionery, continue to experience upward pressure on their prices. This is primarily due to poor cocoa harvests. However, the study also noted that prices for toilet tissue, butter, and milk were still falling at a faster rate.
Despite efforts to bring down the pace of price increases through discounting, Kantar’s survey found that 22% of supermarket customers are still struggling to make ends meet. On the other hand, a larger proportion of shoppers reported feeling financially comfortable, with 36% stating that their financial position was satisfactory. This is the highest level seen since November of 2021 and is largely attributed to the growth in pay outpacing inflation for over a year.
While personal finances may be improving, the report also revealed a hit to revenue growth values among grocers. This is due to a combination of easing grocery inflation and the impact of the sixth-wettest spring on record. The study found that there were nearly 25% fewer sales of suncare items and an 11% decrease in sales of prepared salads compared to the same period last year. However, fresh soup sales saw a significant increase of almost 24%.
Fraser McKevitt, Head of Retail and Consumer Insight at Kantar, noted that supermarkets are now targeting football fans as part of their promotional competition for business. He said, “With the men’s UEFA European Football Championship underway, the supermarkets will be waiting to see if positive performances by England and Scotland can deliver a win at the tills too.” He added, “The grocers are looking to entice in consumers enjoying this year’s tournament, with the proportion of beer and lager sales on promotion leaping up to over 40% in the latest four weeks.”
McKevitt also mentioned that retailers will not only be competing with each other, but also with fans leaving their homes to watch the football. He pointed out that pubs, in particular, could see a boost in sales during the tournament. He stated, “Throughout the last tournament held in 2021, sales of food and non-alcoholic drinks in pubs soared by 60% compared with the average month that year.”
The release of Kantar’s report comes just before the general election and less than 24 hours before the latest official inflation figures are set to be released. A poll of economists conducted by Reuters predicts that the main consumer prices index (CPI) will show a decrease to 2% in the 12 months leading up to May, down from 2.3% the previous month. This would bring the rate in line with the Bank of England’s target rate of 2%. However, experts do not expect this progress to result in an interest rate cut on Thursday, as the majority of the Bank’s rate-setting committee is concerned about inflation rising again in the second half of the year. Currently, financial markets predict only a 9% chance of the Bank rate being cut from 5.25% to 5% this week.