Economy

UK grocery inflation continues downward trajectory

Annual rate still high at 14.9%

Annual grocery inflation fell 1.6 percentage points from the 16.5 per cent in its June data set. Photograph: Dominic Lipinski/Bloomberg

James Davey
Tue Jul 18 2023 - 11:26

British grocery inflation eased for a fourth month in a row in July, seeing its steepest decline since it peaked in March this year, industry data showed on Tuesday, providing a bit of relief for cash-strapped consumers suffering from high prices.

Market researcher Kantar said annual grocery inflation was 14.9 per cent in the four weeks to July 9th, falling 1.6 percentage points from the 16.5 per cent in its June data set.

“That will be good news for many households, although, of course, the rate is still incredibly high,” Fraser McKevitt, head of retail and consumer insight at Kantar said.

Prices are rising fastest for the likes of eggs, cooking sauces and frozen potato products. The Conservative government’s key pledge to halve inflation in 2023 in advance of a probable election in 2024 has been undermined by stubbornly high food inflation.

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Signs that it is abating are being closely watched by consumers, the Bank of England and MPs. Last month, market leader Tesco said food inflation had peaked and all of Britain’s major grocers have cut the prices of some products in recent weeks. New reductions were announced by Iceland Foods on Tuesday.

[ Turnover at McCambridge Bread up 19% after group raised prices ]

The Kantar data going into July provides the most up-to-date snapshot of UK grocery inflation. Official data for overall UK inflation in June will be published on Wednesday.

It was running at 8.7 per cent in May – the highest rate among the world’s big rich economies. Kantar said that at the current level of grocery inflation, households would have spent £683 pounds (€795) more on their annual grocery bill to buy the same items as they did a year previously but consumers have adapted their habits to limit this increase, whether by trading down to cheaper products or visiting different grocers.

It said the average annual increase to household spending over the past 12 months has actually been £330. The researcher said UK grocery sales rose 10.4 per cent over the four-week period year-on-year on a value basis. – Reuters

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