With grocery inflation continuing to rise, spend on groceries is far outstripping the number of items shoppers are buying, according to new data from Nielsen.
Retailers are finding it harder to continue absorbing rising costs in the food supply chain, the research reveals. In the four weeks to October 7, UK supermarkets saw sales revenue rise 3.9% year-on-year, the seventh consecutive month of sales growth above 2.0%. (Nielsen Homescan FMCG).
However, volume of goods sold increased by just 1.6%. Excluding the discounters, the study revealed volumes didn’t increase at all. (Nielsen Scantrack)
Mike Watkins, UK head of retailer and business insight at Nielsen, said: “Supermarket food inflation, at 2.2%, is at its highest for nearly four years (BRC-Nielsen SPI September) and retailers have done a great job of cushioning shoppers from the rising food chain costs they’re experiencing, exacerbated by the weakening pound, but this can’t last for ever.
“Meanwhile, the good news for shoppers is that grocery inflation is still below that in other parts of the economy – such as travel and fuel – and should peak later in the year. Furthermore, retailers are likely to up their use of price-saving promotions at Christmas, offsetting some of the inflation.”
Confectionery (+6.6%), alcohol (+5.5%) and packaged grocery (+5.1%) saw particularly strong growth in sales, with only soft drinks (-1.8%) down year-on-year.
Watkins added: “The competition for extra sales in non-essentials such as treats, indulgences and also fresh foods, will soon intensify. Even though Aldi and Lidl have maintained double digit growth all year, we expect people to shop around for their Christmas groceries and make more visits to retailers offering promotions, which may benefit the supermarkets who’ve wider seasonal ranges and a variety of store formats including online.”