UK grocery inflation eases on supermarket deals

Shoppers at a supermarket in London. Retail analyst Kantar says grocery price inflation has fallen for the fourth month in a row as supermarkets push promotions. EPA

Promotions and deals on products at Britain's supermarkets have played a part in another monthly drop in grocery price inflation, according to new figures.

Grocery price inflation was down to 14.9 per cent in the four weeks to July 9, down from 16.5 per cent over the previous month, according to analysts Kantar.

It is the fourth month in a row that inflation has fallen from its peak of 17.5 per cent in March. The wider CPI inflation for the UK was 8.7 per cent in May and new figures for June are out in the next week.

Looking for loyalty

"This will be good news for many households although, of course, the rate is still incredibly high," said Fraser McKevitt, head of retail and consumer insight at Kantar.

"One of the biggest shifts we've seen in this area is retailers ramping up loyalty card deals like Tesco's Clubcard Prices and Sainsbury's Nectar Prices.

"This could signal a change in focus by the grocers who had been concentrating their efforts on everyday low pricing, particularly by offering more value own-label lines.

"The boost to promotional spending has contributed to bringing inflation down but this isn't all that's driving the change.

"Prices were rising quickly last summer so this latest slowdown is partially down to current figures being compared with those higher rates one year ago."

Theoretically, consumers would have spent an extra £683 on groceries this year when compared to last year's prices on the same goods, when inflation is taken into account.

But Kantar found that, in reality, the real figure is much lower, because of increased customer savvy leading to changed buying patterns.

"It's clear that shoppers have dramatically changed their behaviour to combat inflation, whether by trading down to cheaper products or visiting different grocers," Mr McKevitt said.

"The average annual increase to household spending over the past 12 months has actually been £330 - well below the hypothetical £683."

Summer sales

Some small summer luxuries did not fall by the wayside though. The Wimbledon tennis tournament boosted spending on strawberries and fresh cream, which rose by 16 per cent and 13 per cent respectively compared with last year.

Meanwhile, the pleasant weather in June saw sales volumes of barbecue items increase – sales of chilled burgers were 7 per cent higher.

At the same time, sales of hay fever remedies grew by 16 per cent over the past month as for many people this year turned out to be particular bad for those with seasonal allergies.