Grocery price inflation has risen for the first time in more than a year – but this did not stop shoppers splashing out on booze to celebrate a summer of sport, new figures suggest.
Wine sales were up 35% on the day of the Olympic opening ceremony and £10m worth of beer was sold on the day of the Euro football final, according to market research firm Kantar.
That came despite a 1.8% rise in grocery price inflation in the four weeks to August, 0.2% higher than the prior four weeks.
The rate of supermarket price rises had previously fallen for 17 months in a row, according to Kantar.
It is getting slightly “easier to go shopping at the supermarket than this time last year”, Fraser McKevitt, Kantar’s head of retail and consumer insight told the BBC.
“We’ve moved well away from those days of double digit grocery price inflation,” he said, but said consumers should shop around to get the best value for money.
Kantar data suggested products which saw the fastest price rises included vitamin and mineral supplements, fruit juices and chocolate. Meanwhile toilet tissues, bottled cola and dog food saw the slowest price rises.
It added that the return to better weather meant barbecue food sales were boosted in the weeks to August.
Sales of cough lozenges rose by 28% as people battled Covid-19 and summer colds too, Kantar said.
Supermarkets are locked in a fierce competition for customers, evidenced by lots of promotions and discounts being offered at the moment, Mr McKevitt added.
Compared with last year, there was also an uptick of 3.8% in the amount people were taking home from supermarkets.
The British Retail Consortium (BRC) warned that further inflation could be expected as climate change damages harvests after unusually wet weather in England.
Extreme heat in other parts of the world has also destroyed crops which has reduced supply, pushing prices up.
Combined with rising geopolitical tensions, further inflationary pressures could be “lurking just over the horizon,” said Helen Dickinson of the BRC.
Overall inflation in the UK held at the Bank of England’s target rate of 2% in June, although economists expect July’s data to show a rise when it is released on Wednesday. This is partly because energy prices are not expected to have dropped as sharply this year compared to falls in 2023.
The Bank of England key interest rate was this month lowered to 5% from 5.25%, marking the first cut since the start of the pandemic in March 2020. It had been raising the interest rate in a bid to cool inflation, which had been running at record levels in recent years.
Kantar’s latest data also showed among Britain’s best-known supermarkets, Asda was rapidly losing its grip on market share.
Its share of the groceries market was down 1.1% compared with last year, while rivals such as Sainsbury’s recorded its largest year-on-year gain since July 1997.
Asda now has a 12.6% share of the UK grocery market, versus Tesco’s 27.6%.
It reported a fall in sales of more than 5% in its latest financial results, prompting its chairman Lord Stuart Rose to suggest that co-owner Mohsin Issa should step back from running the firm.
He told the Telegraph newspaper he was “embarrassed by the supermarket’s recent performance.
Increasing competition from the discount supermarkets is reportedly eating into Asda’s successes, but chief financial officer Michael Gleeson said: “It is important to highlight that switching losses to the discounters, Aldi and Lidl as well, have receded”.