Supermarket price squeeze as shopping habits settle at 'new baseline'

Consumers gearing up early for the festive season

Grocery price inflation has hit its highest since August of last year as shopping habits appear to be settling into a new post-pandemic norm.

Market researcher Kantar said inflation hit 2.1 per cent during the four weeks to October 31, adding further pressure to household finances. Costs are rising fastest for items such as savoury snacks, canned colas and crisps while falling for fresh bacon and vegetables.

Take home grocery sales fell by 1.9% during the 12 weeks to the end of October, but remained 7.3% higher than during the same period in 2019. 

Kantar said the general trend towards bigger, less frequent shopping trips looks "set to stay", with households visting supermarkets an average of 15.7 times during the past month. That was a slight increase from 15.3 in the equivalent period in 2020, but consumers are still making 40 million fewer trips per month than they were in 2019.

Fraser McKevitt, head of retail and consumer insight at Kantar, said at that rate it will take three years to get back to pre-pandemic shopping patterns that favoured smaller, more frequent shopping trips.

“Online sales have also levelled out," he added.

"For the second month in a row, digital sales accounted for 12.4% of the total grocery market. A fifth of households consistently order groceries online each month, becoming long-term converts.”

Rising prices are expected to support a trend towards "shopping around", with consumers already visiting an average of 3.3 supermarkets per month to find the best value for money.

Evidence also points towards consumers gearing up early for the festive season, Mr McKevitt said.

"An unrestricted Halloween drove sales of pumpkins up 26% in the four weeks to 31 October, and with trick or treating back on the cards seasonal confectionery grew by 27%," he said.

“With Christmas ads out earlier than ever and Christmas stock on the shelves, we’re keen to prepare early this year so we can dive head first into festivities. Four point seven million households bought mince pies this month.

"Customers are also getting ahead on shopping for the big day itself. Frozen poultry sales are 27% higher year-on-year, with people spending an additional £6.1 million in the latest four weeks. One point six million households bought their Christmas pudding this month as well, 400,000 more than last year.”

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Diane McGiffen

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NIESR: UK faces slow growth and high inflation

The UK economy risks stagnation and sticky inflation in the coming years due to persistent supply-chain bottlenecks and headwinds from Brexit, according to the National Institute of Economic and Social Research (NIESR).

Inflation is on course to hit approximately 5% next year, the think-tank said, while the economy looks set to grow by only 1.7% in 2023 and 1.3% in 2024 following sharper post-pandemic rebounds of 6.9% in 2021 and 4.7% in 2022.

"We may be faced with economic stagnation," NIESR director Jagjit Chadha said. "We believe that short-run supply problems faced by the UK will persist and are likely to be exacerbated by Brexit."

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Reduced European Union immigration and lower business investment than would have been the case without Brexit will also limit future growth and productivity, the forecasts showed.

"We're getting economic management of the UK economy wrong," Mr Chadha said, pointing to years of under-investment in training, housing and infrastructure, especially outside London.

Its forecasts paint a broadly similar picture for growth to those last week from the Bank of England, but NIESR expects inflation to be slower to fall.