Supermarkets urged to boost budget ranges as annual grocery bills soar by £571 in a year

The latest figure means that the average annual grocery bill will increase from £4,610 to £5,181 if consumers do not change the products they buy and how they shop to cut costs.

Categories like milk, butter and dog food are rising particularly quickly, at 31%, 25% and 29% respectively.

However shoppers are taking steps to manage their budgets by broadening the range of stores they visit and the products they buy.

Sales of the very cheapest own-label value products are up by 33% on a year ago, with almost one in four baskets containing one of these lines.

Overall spending on all retailer own-label lines was £393 million higher during the latest four weeks, pushing their share of the market to 51.1%.

Research by the consumer organisation Which in May pointed to both a decline in availability of supermarket discounts and budget ranges as being behind prices hikes, as the cost of living crisis continues to bite.

It comes as Asda has begun restricting how many items shoppers can buy from its discount range to three of each product as inflation continues to soar.

Asda introduced a new Just Essentials range in May that it rolled out more widely in August, featuring bright yellow packaging and low prices. This replaces its Smart Price budget range.

The grocer says it has had to impose restrictions because of huge demand and is just for "a short time".

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Data from the UK's Office for National Statistics shows that food and non-alcoholic beverage prices rose by 12.7% in the year to July 2022, including an increase of 2.3% between June and July, the highest monthly increase since May 2001.

In May, Which found the prices of 265 popular grocery items has soared by an average of more than 20% in two years.

They found that budget own-brand items were out of stock on three times as many days during a most recent three-month period, compared to two years previously.

Own-brand cheese was out of stock the most of all the 20 products categories Which? looked at. It was out of stock six days in 2019 compared to 17 days in 2022.

Sue Davies, Which head of food and consumer protection policy, said: “Grocery bills rising by over £500 a year will put a huge dent in already-stretched household finances. Earlier this year, Which? found th “Budget ranges are becoming increasingly vital amid the worsening cost of living crisis, but our investigations have suggested that own-brand budget labels have become less available just as consumers need them most.

“Supermarkets must boost budget range availability across stores so people do not have to pay excessive prices for everyday essentials. They should also be more upfront about costs and provide clear unit pricing to help shoppers to easily compare items.”

The latest research found that Aldi’s market share rose by 1.2 percentage points to make it Britain’s fourth largest supermarket for the first time.

The German discounter’s sales rose by 18.7% over the 12 weeks to September 4, reaching 9.3% market share, while fellow discounter Lidl increased its sales by 20.9% and its market share to 7.1%.

Take-home grocery sales increased by 3.8% over the quarter – the third month of growth in a row after more than a year of decline as a consequence of comparisons with the pandemic.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “It seems there’s no end in sight to grocery inflation as the rate at which food and drink prices are increasing continues to accelerate.

“In what is a fiercely competitive sector, supermarkets are reacting to make sure they’re seen to acknowledge the challenges consumers are facing and offer best value, in particular by expanding their own-label ranges.”

He added: “Back at the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three-quarters of the sector but that traditional big four is no more.

“The discounters have seen dramatic sales increases in recent months, bringing more and more customers through their doors. Aldi has done well to expand its shopper base, supported by consistent store openings, and with 14.2 million consumers visiting the grocer in the past three months."

Meanwhile, for the fourth month in a row Lidl was the fastest-growing grocer and recorded its strongest sales performance since October 2014.