Shoppers in Great Britain have faced increased pressure on their budgets in recent weeks after grocery price inflation rose for the first time since March last year, returning to the rate before the cost of living crisis.
Supermarket prices were 1.8% higher than a year ago in the four weeks to 4 August, up slightly from 1.6% in July, according to the retail analysts Kantar. This rise came after 17 months of easing grocery inflation from a peak of 17.5% to its lowest point since September 2021 last month.
Official figures released on Wednesday are expected to show the UK’s headline inflation returned above the Bank of England’s 2% target in July, driven in part by fast-rising prices for air travel, hotels and package holidays.
Prices rose fastest for vitamins, minerals and supplements, as well as fruit juices and chocolate confectionery, while prices fell fastest in toilet paper, bottled colas and dog food.
Among household staples, eggs went up 1.2% in price while milk became 0.8% more expensive, and the price of bread slipped by 0.5%.
There was a mixed picture on supermarket shelves, as prices rose across 182 product categories while the cost of 89 others dropped. Kitchen towels and baked beans were 7% and 5% cheaper respectively than this time last year.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly. While this is noticeable after 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.
“With this kind of pricing spread, shoppers will find that the type of product they’re putting in their baskets will really dictate how much they pay.”
Consumers took advantage of promotions offered by grocers to keep their shopping bills down, and spending on deals rose by 15%, while sales of products at their usual price did not increase, Kantar said.
As the weather became warm and sunny in July and into August, sales of ice-cream and burgers rose by 23% and 32% respectively compared with last year, while sales of chilled prepared salad were up by 22%.
Despite pressure on their budgets, people spent to celebrate the summer of sport. Sales of wine rose by 35%, nuts by 60% and crisps by 10% on the Friday of the Olympics opening ceremony, compared with the week before.
Football fans spent £10m on beer on the day of the Euro 2024 football final, when England lost to Italy, the biggest figure on a Sunday in more than three years.
Consumers also bought 28% more cough lozenges as many people battled Covid-19 and summer colds.
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Sainsbury’s was again the fastest-growing of the traditional supermarkets, as sales increased by 5.2%. It recorded its largest market share gain since July 1997, up by 0.5 percentage points over the quarter compared with the same period last year.
Sales rose by 11.3% at the online retailer Ocado, which continued its six-month run as the fastest-growing grocer overall.
Britain’s largest grocer, Tesco, maintained its streak of winning market share every month since August last year, rising to 27.6% while increasing sales by 4.9%.
Asda reported a 5.3% decline in sales at established stores for the three months to the end of June last week. Its chair, the veteran retailer Stuart Rose, said he was “embarrassed” by the supermarket’s market share loss and called on its co-owner Mohsin Issa to take a step back from the day-to-day running of the retailer.
Asda’s market share fell to 12.6% in the 12 weeks to 4 August, from 13.7% a year earlier, according to Kantar.
“I’ve been in this industry for a long time and I am slightly embarrassed. I won’t deny that,” Lord Rose said in an interview with the Telegraph.
