Shoppers opt for cheaper lines as annual food bills surge by £380 after grocery inflation hits 13-year high
- Food price inflation soared to 8.3%, from 7% in May, its highest level since 2009
- The surge adds £380 to the average annual food bill, according to Kantar
- Shoppers are already swapping branded items for cheaper own-label products
- Aldi and Lidl major beneficiaries of trading down as their market share rise
Supermarket shoppers are already swapping branded items for cheaper own-label alternatives as grocery bills rise at their fastest pace in almost 13 years.
Food price inflation soared to 8.3 per cent this month, from 7 per cent in May, hitting the highest level since 2009 and adding £380 to the average annual food bill, according to Kantar research.
Prices are rising fastest for products such as butter, milk and dog food, while falling for spirits, adding an extra £100 since April alone.
Some of the major beneficiaries of the surge in demand for cheaper products have been German discounters like Aldi and Lidl
The figures demonstrate ‘just how sharp price increases have been recently and the impact inflation is having on the sector’, Kantar said.
It found that sales of branded products fell by 1 per cent in the three months to 12 June compared to last year.
Meanwhile, sales of supermarkets’ own-labels soared by 2.9 per cent and value-own label lines surged by an even larger 12 per cent.
Some of the major beneficiaries of this surge in demand for cheaper products have been German discounters like Aldi and Lidl, ‘both of whom have extensive own-label repertoires’, Kantar said.
The two discounters gained more market share, with Lidl reaching 6.9 per cent of the whole grocery market and Aldi gaining 0.8 percentage points to 9 per cent compared to last year.
Lidl once again saw the fastest sales growth of all supermarkets at 9.6 per cent, followed by Aldi, which saw sales rise 7.9 per cent.
To save money, shoppers have also turned to value ranges, such as ASDA Smart Price, Co-op Honest Value and Sainsbury’s Imperfectly Tasty, Kantar added.
Last week, Tesco said it was starting to see ‘early signs’ of shoppers trading down in products including bread, pasta and baked beans as they tighten their belts amid the cost of living crisis.
‘The inflation number makes for difficult reading and shoppers will be watching budgets closely as the cost-of-living crisis takes its toll,’ said Fraser McKevitt, head of retail and consumer insight at Kantar.
Supermarket sales rose 0.4% in the last month, boosted by Britons splashing out on the Platinum Jubilee celebrations
Overall, supermarket sales fell by 1.9 per cent during the last three months when compared to the record sales seen during the pandemic.
Kantar said this was ‘the best market performance since October last year’ and that sales over the last four weeks actually grew by 0.4 per cent, boosted by Britons splashing out on the Platinum Jubilee celebrations.
Sales during the Jubilee week were £87million higher than on average in 2022, according to the report.
McKevitt said: ‘The sector hasn’t been in growth since April 2021 as it measures up against the record sales seen during the pandemic.
‘However, these latest numbers show the market is to an extent returning to pre-Covid norms as we begin comparisons with post-lockdown times.’
Tesco, Lidl and Aldi all gained market share in the last three months
Iceland held its market share flat, but Kantar said the frozen food retailer has seen ‘especially strong sales’ thanks to its 10 per cent discount offer for over 60s.
Tesco, Britain’s biggest grocer, nudged its market share up to 27.3 per cent, but sales were flat.
Online retailer Ocado saw sales fall by 2.3 per cent, but it was able to retain its 1.8 per cent slice of the market.