UK grocery inflation continues to cool, rain dampens demand - Kantar

[August 15, 2023]  By James Davey

LONDON (Reuters) -British grocery inflation eased for a fifth straight month in August while wet weather dented sales growth, industry data showed on Tuesday.

Market researcher Kantar said annual grocery inflation was 12.7% in the four weeks to August 6 versus 14.9% in its July data set.

It said the outcome was the second sharpest monthly fall since it started monitoring grocery inflation in its current way in 2008.

"Prices are still up year on year across every supermarket shelf, but consumers will have been relieved to see the cost of some staple goods starting to edge down compared with earlier in 2023," Fraser McKevitt, head of retail and consumer insight at Kantar, said, pointing to price falls in milk and sunflower oil.

Kantar noted prices are rising fastest in foods such as eggs, frozen potato products and sugar confectionery.

The Conservative government's key economic pledge to halve inflation in 2023 ahead of a probable election in 2024 has been challenged by stubbornly high food inflation.

Its recent downward trajectory is being closely watched by consumers, the Bank of England (BoE) and lawmakers.

In June, Tesco, Britain's biggest retailer, said food inflation had peaked and all of the country's major grocers have cut the prices of some products over the last month.

People shop at a grocery market, in London, Britain May 6, 2023. REUTERS/Emilie Madi/File Photo

Supermarket chains have had to defend themselves against claims they have profiteered from a cost of living crisis.

The Kantar data going into August provides the most up to date snapshot of UK grocery inflation.

Official data published last month showed overall inflation in June was 7.9%, the highest of any major economy, with food inflation at 17.3%. Official data for July is published on Wednesday.

The BoE has forecast that food price inflation will fall to around 10% later this year.

Kantar said grocery sales increased 6.5% year-on-year over the four week period on a value basis, down from growth of 10.4% in its July report, as unseasonable weather put the dampeners on sales of usual summer favourites, such as ice cream, soft drinks and barbecue products.

Discounters Aldi and Lidl were again the fastest growing grocers over the 12 weeks to August 6, with sales up 21.2% and 19.8% respectively.

(Reporting by James Davey; Editing by Conor Humphries)

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