UK grocery prices rose at a record pace this month, adding £837 to the average household’s annual bill as the cost of living crisis held its grip on shoppers, according to new sector data.
Supermarket prices increased at an annual rate of 17.5 per cent in March, market research group Kantar said on Tuesday, the highest reading since records began in 2008, with the cost of eggs, milk and cheese rising fastest.
“Unfortunately, it’s more bad news for the British public, who are experiencing the ninth month of double-digit grocery price inflation,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
Britons have been increasingly turning to cheaper supermarkets in response to financial pressures, the research showed.
Lidl was the fastest growing chain in the category with sales rising by an annual rate of 25.8 per cent, pushing its market share to 7.4 per cent. Aldi secured a new record market share of 9.9 per cent, driven by a 25.4 per cent rise in sales.
People also sought to reduce their grocery bills by buying cheaper label items, with own-brand sales up 15.8 per cent, the data showed.
Consumers also shopped around in search of better deals. Footfall at all grocers rose, pushing the frequency of visits to their highest level since the start of the Covid pandemic, apart from over the Christmas period, Kantar said.
“Shoppers are taking action and clearly hunting around for the best value,” said McKevitt.
The data showed that more shoppers were turning to independent shops when certain groceries were not available at larger supermarkets. The volume of tomatoes, peppers and cucumbers bought in these stores rose 32 per cent, 26 per cent and 21 per cent, respectively.
Research from the British Retail Consortium, released on Tuesday, underscored the sharp rise in food inflation, which last month grew at its fastest pace since records began in 2005.
Shortages of fruit and vegetables contributed to the price acceleration, according to the BRC.
Bad weather in Europe and north Africa combined with high electricity costs across the continent have limited the availability of fruit and vegetables this year, pushing prices up.
Last week, the Office for National Statistics reported that inflation jumped to 10.4 per cent in February, up from 10.1 per cent in January. This disappointed expectations of a decline, with the cost of food and non-alcoholic beverages rising at their fastest pace for 45 years.
Walid Koudmani, chief market analyst at online investment platform XTB.com, said: “People may need to cut back on discretionary purchases to compensate for the higher cost of groceries,” which could negatively impact the economy.
High inflation could push the Bank of England “to further increase interest rates, leading to reduced investment and slower economic growth,” he added.
Andrew Bailey, governor of the BoE, said on Monday that recent turmoil in the banking sector, which started with the collapse of the Silicon Valley Bank, would not deter the central bank from controlling inflation with high interest rates.
Source: Financial Times