Britons Curb Spending Despite Drop in Grocery Inflation, Reports Kantar

Britons Curb Spending Despite Drop in Grocery Inflation, Reports Kantar

19 Jun    Finance News, News

Britons have curtailed their supermarket shopping and traditional summer purchases due to recent poor weather, despite a further decline in grocery price inflation, according to a report by Kantar.

In the four weeks to 9 June, supermarket prices were 2.1% higher than a year ago, down from May’s 2.4% inflation rate. This marks the 16th consecutive month of slowing price rises. Kantar noted that costs are falling in nearly a third of the categories it monitors, including toilet tissue, butter, and milk—an improvement from last year when only 1% of categories showed price declines.

The monthly report precedes the release of official UK inflation figures for May, expected to show headline inflation falling from 2.3% in April to the government-set target of 2%.

Fraser McKevitt, head of retail and consumer insight at Kantar, highlighted that despite the reduction in grocery inflation, “the cost of living crisis isn’t over—far from it.” He noted that 22% of households reported struggling to cover expenses or just making ends meet.

McKevitt added: “However, there are positive signs that many of us no longer feel the need to restrict our spending quite 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 proportion since November 2021—sales rose by just 1% in June, the slowest increase since June 2022, according to Kantar. Footfall also dipped.

The wet weather resulted in nearly 25% fewer sun care items and 11% fewer prepared salads being bought compared to last year. Conversely, sales of fresh soup jumped by almost 24%.

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McKevitt remarked: “The sixth wettest spring on record hasn’t just dampened our spirits leading into summer; it’s impacted the grocery sector too, with Britons seemingly deterred from frequenting the shops. We’re not yet reaching for typical summertime products and are making some 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 over 40% in the last four weeks.

“Retailers will be competing with fans heading out of the house to watch the football as well as with each other,” said McKevitt. “Pubs especially could benefit from a boost—whether or not football comes home. During the last tournament in 2021, sales of food and non-alcoholic drinks in pubs soared by 60% compared with the average month that year.”

Tesco solidified its position as Britain’s largest supermarket, with a market share of 27.7% following a 4.6% rise in sales in the three months to 9 June compared with a year earlier. Sales increased at all major supermarkets over the period, except for Asda, which saw a 4% decline, and Co-op, down by 2.3%.

Ocado emerged as the fastest-growing grocer for the fourth consecutive month, with a 10.7% increase in sales over the 12 weeks to 9 June. Almost a quarter of British households (23%) did their grocery shopping online in the last three months, with more than 4% opting for Ocado.

Discounter Aldi, the fourth-largest retailer by consumer spend, boosted sales by 0.8%, now holding a market share of 10%.

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