After signs that food inflation has passed its peak in January, shoppers are now facing the largest increase in grocery bills ever recorded.
January saw a 16.7pc increase in grocery prices year-on-year, the highest rise since Kantar began monitoring food inflation in 2008 This included a “staggeringly” 2.3 percentage points jump in the four-week period ending January 22.
The previous record was set in October 2022. Inflation appeared to be on the decline in November and December.
- That was a 2.3pp increase on the rate in December.
- Prices are reported to have been driven by milk, eggs and dog food.
- High food prices saw the share of discount chains expanding strongly with Aldi and Lidl sales climbing 26.9% and 24.1% this month.
Kantar analysts said that “that small sign for relief for consumers was short-lived” in January as supermarkets raised their prices after the Christmas period. According to Kantar’s analysis, milk, eggs, and dog food were the most expensive items.
Kantar’s head for retail and consumer insights, Fraser McKevitt, stated that households will now be charged an additional PS788 on their annual shopping bills if they do not change their behaviour to reduce costs.
This is despite supermarkets saying they are being more aggressive with suppliers to maintain lower prices for customers.
John Allan, chairman of Tesco, stated earlier this month that Britain’s largest supermarket “tries very hard I believe to challenge cost rises” by its suppliers.
He stated that it was possible for brands to attempt to raise prices in order to take advantage of current inflation
Morrisons is one example of a company that has stated they are using more “robust”, in-depth approaches to their supplier negotiations. Last year, Morrisons fell from being Britain’s fourth-largest supermarket to becoming its fifth. has recently made price cuts in all of its ranges to try to lure shoppers back.
Kantar stated that there was a decline in promotions across all supermarkets, due to more grocers focusing on price-matching with their competitors or offering savings through loyalty programs. Kantar stated that the proportion of promotions spending fell to its lowest point since at least 2008.
Aldi and Lidl were more popular as shoppers began to shop in the face of increasing household budget pressures and rising prices. Both supermarkets grew at an average rate of 26.9pc year-on-year, while sales at Aldi were 26.9pc more than last year. Lidl sales were 24.1pc lower. This compares to 6pc sales growth for Asda, Sainsbury’s, and Tesco.
