In the UK, consumer budgets have been under increasing pressure in recent weeks after food inflation rose for the first time since March last year, falling back to pre-cost-of-living crisis levels.
Supermarket prices were 1.8% higher in the four weeks to August 4 than a year ago, up slightly from 1.6% in July, according to retail analyst Kantar. The increase came after 17 months of falling inflation from a peak of 17.5% to its lowest level since September 2021 last month.
Supermarket shelves presented a mixed picture, with prices rising in 182 product categories and costs falling in 89 others. Kitchen towels and baked beans were 7% and 5% cheaper respectively than in the same period last year.
Fraser McKevitt, head of retail and consumer research at Kantar, said: “After hitting its lowest level in almost three years in July, inflation rose slightly again in August. While this is noticeable after 17 months of falling interest rates, it actually marks a return to the average levels of the five years before the cost of living crisis began.
“At this price range, shoppers will find that the type of product they put in their basket actually determines how much they pay.”
Official figures released on Wednesday are expected to show that inflation in the UK was again above the Bank of England’s target of two percent in July. This is partly due to rapidly rising prices for flights, hotels and package holidays.
Consumers took advantage of grocery retailers’ special offers to keep their shopping bills low, spending 15% more on special offers while sales of regular-priced products did not increase.
As the weather turned warm and sunny in July and August, sales of ice cream and burgers increased by 23% and 32% respectively compared to the previous year, while sales of chilled ready-made salads increased by 22%.
On the Friday of the Olympic opening ceremony, wine sales rose 35% compared to the previous week, nuts rose 60% and chips sales rose 10%.
On the day of the Euro 2024 final, football fans spent £10 million on beer, the highest amount spent on a Sunday in over three years.
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In addition, consumers bought 28% more cough lozenges as many people struggled with Covid-19 and summer colds.
Sainsbury’s was once again the fastest growing supermarket, with sales up 5.2 percent. The company recorded its biggest market share gain since July 1997, increasing by 0.5 percentage points quarter-on-quarter.
Online retailer Ocado reported sales growth of 11.3 percent, making it the fastest-growing grocery retailer overall in the six months of the year.
Britain’s largest grocer Tesco has continued its series of monthly market share gains since August last year, rising to 27.6 percent while sales increased by 4.9 percent.
