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Brits are cutting back on spending despite a drop in supermarket inflation, Kantar reports



Brits are cutting back on spending despite a drop in supermarket inflation, Kantar reports, Brits have cut back on their supermarket shopping and traditional summer shopping due to the recent bad weather, despite a further fall in food price inflation, according to a report from Kantar.

In the four weeks to June 9, supermarket prices were 2.1% higher than a year ago, lower than inflation of 2.4% in May. This is the sixteenth month in a row in which price increases have decreased. Kantar noted that costs are falling in almost a third of the categories it monitors, including toilet paper, butter and milk – an improvement from last year, when only 1% of categories saw price drops.

The monthly report precedes the publication of official British inflation figures for May. Headline inflation is expected to fall to the government’s target of 2% from 2.3% in April.

Fraser McKevitt, head of retail and consumer insights at Kantar, stressed that despite the fall in supermarket inflation, “the cost of living crisis is not over yet – far from it.” He noted that 22% of households reported struggling to cover expenses or simply make ends meet.

McKevitt added: “However, there are positive signs that many of us no longer feel the need to restrict our spending so much, with lower inflation helping to ease the pressure on people’s pockets.”

Despite 36% of households describing their financial position as comfortable – the highest percentage since November 2021 – sales rose just 1% in June, the slowest increase since June 2022, Kantar said. Visitor numbers also fell.

The wet weather resulted in almost 25% fewer sun care items and 11% fewer ready-made salads being purchased compared to last year. Conversely, sales of fresh soup increased by almost 24%.

McKevitt noted: “The sixth wettest spring on record has not only dampened our mood heading into summer; it has also had an impact on the food sector, with Brits seemingly being deterred from visiting the shops. We are not yet reaching for typical summer products and are making a number of unexpected purchases for June.”

Supermarkets and pubs are banking on strong performances from England and Scotland in the Euro 2024 tournament to boost spending, with beer and lager promotions jumping to more than 40% in the past four weeks.

“Retailers will be competing with fans who leave home to watch football, but also with each other,” McKevitt said. “Cafes in particular could benefit from a boost, regardless of whether football comes home or not. During the last tournament in 2021, sales of food and non-alcoholic drinks in pubs increased by 60% compared to the average month of that year.”

Tesco consolidated its position as Britain’s biggest supermarket, with a 27.7% market share, after sales rose 4.6% in the three months to June 9 compared to a year earlier. Sales rose at all major supermarkets in the recent period, except Asda, which saw a decline of 4%, and Co-op, which fell 2.3%.

Ocado emerged as the fastest growing grocer for the fourth month in a row, with sales up 10.7% in the 12 weeks to June 9. Nearly a quarter of British households (23%) have done their shopping online in the past three months, with more than 4% choosing Ocado.

Discounter Aldi, the fourth-largest retailer in terms of consumer spending, increased turnover by 0.8% and now has a market share of 10%.