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UK grocery inflation has slowed to single digits for the first time in 16 months, according to sector data that will add to hopes of food prices normalising in the coming months after a long run of sharp increases for households.
The annual rate of supermarket price rises was 9.7 per cent in the four weeks to October 29, research company Kantar said on Tuesday, down from 11 per cent in September and well below the all-time peak of 17.5 per cent in March.
Tuesday’s reading, the first in single digits since July 2022, suggests that next week’s official food inflation figure will decline further, which would help bring down overall inflation and support real incomes.
This would be welcomed by policymakers as they seek to lower price growth from 6.7 per cent now to the 2 per cent target, and could ease pressure on the Bank of England to keep interest rates high for a prolonged period.
Last month, the Office for National Statistics said price growth of food and non-alcoholic beverages was 12.1 per cent in September, down from a 45-year high of 19.2 per cent in March. Wholesale food prices soared in the summer of 2022 following Russia’s invasion of Ukraine, hitting the poorest households hardest.
Last week, separate unofficial data showed UK shop price growth also eased to the lowest rate in more than a year.
Fraser McKevitt, Kantar’s head of retail and consumer insight, said the end of double-digit growth in grocery price inflation marked a “big milestone for the British public and retailers”.
But he cautioned that households were still “feeling the pinch” because of annual price falls in only a limited number of big categories including butter, dried pasta and milk.
Consumers were continuing to increase their purchases of supermarkets’ own-label products, rather than branded goods, and to favour cheaper retailers, according to Kantar. It said discounters Lidl and Aldi registered the fastest annual sales growth of 14.7 per cent and 13.2 per cent respectively compared with 7.9 per cent across the grocery sector.
Supermarkets, meanwhile, continued to try to soften the blow for shoppers, with the proportion of sales through deals increasing at every grocer compared with last year — something that has happened only once in the past decade.
Myron Jobson, senior personal finance analyst at the investment platform Interactive Investor, said: “Britons have been force-fed a diet of higher costs for basic necessities for a prolonged period and the fact that we’re seeing some easing in food inflation is really important for shoppers.”
Separate data on Tuesday from the British Retail Consortium, a trade body, and payments company Barclays showed a slowdown in the annual rate of retail sales and consumer spending to well below inflation, indicating that households were cutting back on purchases.
Source: Economy - ft.com
