Finance

Food inflation doubles as the cost of some staples including fruit and vegetables jump

Food inflation has doubled in the last month as the price of some staples including fruit and vegetables are on the rise, new figures have showed.

The price of butter, tea and fish rose by more than 5 per cent over the past 12 weeks, with fruit and vegetables, many of which are imported, also showing an increase, according to the latest figures from market research firm Kantar Worldpanel.

Food prices, which have been falling over the past two years, have started to increase as a post-Brexit weaker pound makes imports more expensive.

On the rise: The price of fruit and vegetables have soared in recent months

Food inflation doubled to 1.4 per cent during the past 12 weeks, from 0.7 per cent in the 12 weeks to the end of January, Kantar said.

However, it added that when placed in their longer-term context, these price increases were ‘still fairly minimal’ and that the price of some food items actually fell.

‘It’s important to point out that inflation is still far from universal, with prices actually falling across a number of categories including crisps, bacon and eggs,’ said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

The rise in prices helped supermarket sales to grow at their fastest pace since June 2014, showing a rise of 2.3 per cent compared to the same period last year.

Popular: Lidl was the fastest growing supermarket during the past 12 weeks

Lidl was the fastest growing supermarket during the past 12 weeks – with sales up by 13 per cent – while Aldi grew almost as quickly, increasing sales by 12.9 per cent to reach a record market share of 6.3 per cent.

The two discounters’ combined market share passed 12 per cent for the first time, accounting for almost £1 in every £8 spent on groceries, according to separate figures by Nielsen, also out today.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: ‘Whilst the retail landscape is very different to 25 years ago when Aldi entered the UK, discounter market share is higher than when Kwik Save was at its pomp as the original discounter.

Rising: The price of staples like butter rose more than 5% in the past 3 months

‘The difference today is that Aldi and Lidl aren’t solely associated with low-priced brands, having been very astute at promoting the quality and price of their private-label range to appeal to a wider array of shoppers.’

Kantar said that Tesco, Britain’s biggest grocer, saw sales increase 0.6 per cent in the last three months – the sixth period in a row of increased sales – but that was not enough to stop it from losing some market share.

Number two supermarket Sainsbury’s were up 0.3 per cent, its first growth since March last year, while Morrisons saw sales rise 2.6 per cent, its fastest growth in five years.

But Asda, the UK’s third biggest supermarket, was the only supermarket to see its sales fall 0.8 per cent – still a significant improvement and its best performance since November 2014.

But while supermarkets saw sales rising, retailers saw their first quarterly fall in non-food sales for more than five years, according to separate industry figures.

Data from the British Retail Consortium and KPMG showed like-for-like non-food sales declined by 0.4 per cent in the three months to February – its first drop since November 2011.

The BRC said like-for-like sales were also down 0.4 per cent last month compared with February last year.

Paul Martin, UK head of retail at KPMG, said food sales had continued to ‘buck the trend’, but inflation was hitting retail performance and consumer confidence was showing signs of deteriorating.

Falling sales: Asda was the only supermarket to see a decline in sales in the last 12 weeks

BRC chief executive Helen Dickinson said ‘persistent’ weak sales across non-food categories pointed to an ‘undeniable trend’ of cautious spending on non-essential products.

‘There was some negative distortion created by the later timing of Mother’s Day this year, which meant that some categories, notably women’s accessories and health and beauty, didn’t benefit from the build-up of gift purchases as they did last year,’ she said.

It comes as official figures showed an unexpected fall in retail sales by 0.3 per cent in January, suggesting household spending was being squeezed by Brexit-induced inflation.

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