UK food shopping inflation has hit a record 14.7 per cent, which could add a potential £682 ($785) to the annual cost of a basket, amid warnings there is no sign of a peak.
Purchases of products in supermarket own-label ranges jumped again by 10.3 per cent over the past four weeks and the cheapest value ranges grew by 42 per cent, as shoppers sought to manage their budgets, research firm Kantar reported.
More than a quarter of households (27 per cent) say they are struggling financially — double the figure recorded last November, it said.
It comes as figures show sales slowed in October as retailers brace for consumers opting for second hand gifts and strict budgets this Christmas to cope with soaring bills.
Retail sales during October grew by just over 1 per cent in value year on year, driven by inflationary pressures and masking falling sales volumes as shoppers bought fewer items per visit, British Retail Consortium (BRC) figures show.
Analysts said it was still too early to say food price inflation had peaked, despite the record high prices.
“Yet again, we have a new record-high figure for grocery price inflation and it’s too early right now to call the top,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
“Consumers face a £682 jump in their annual grocery bill if they continue to buy the same items, and just over a quarter of all households now say they’re struggling financially, which is double the proportion we recorded last November.
“Nine in 10 of this group say higher food and drink prices are a major concern, second only to energy bills, so it’s clear just how much grocery inflation is hitting people’s wallets and adding to their domestic worries.”
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Some consumers found light relief at Halloween with more than one in 10 households buying a pumpkin in October, although sales were down compared to last year.
Fewer people stocked the cupboards for Christmas in October, preferring to wait until later in the year.
“This time last year, two million consumers had already bought their festive Christmas pudding,” said Mr McKevitt.
“We’ve seen 32 per cent fewer shoppers doing that this time around, suggesting people are not trying to spread the cost of their purchasing — at least not in October.”
Aldi was the fastest growing retailer in the latest period, increasing its sales by 22.7 per cent year on year to gain 9.2 per cent market share, while Lidl boosted sales by 21.5 per cent to take its market share to a record 7.2 per cent.
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Asda again led the traditional big four supermarkets, with sales growing by 5.3 per cent to maintain an overall market share of 14.3 per cent.
“With economic forecasters warning of a potential recession, it’s worth reflecting on how much the grocery landscape has changed since the 2008 financial crash,” said Mr McKevitt.
“We’ve seen a rise in the market share of the discounters Aldi and Lidl, which together now stands at 16.4 per cent, versus 4.4 per cent 14 years ago.”
Analysts say there are signs consumers are reining in spending, predicting Christmas and beyond could be difficult for many retailers.
A poll by Barclaycard found that almost half of Britons, 48 per cent, are planning to cut down on Christmas purchases, including festive activities and gifts, to save money this year.
Barclaycard, which sees nearly half of the nation's credit and debit card transactions, found that spending on essential items such as fuel and groceries increased 5.7 per cent on last October, steeper than September's 3.3 per cent in a reflection of the impact of rising inflation.
Helen Dickinson, chief executive of the British Retail Consortium, said it was a “difficult time” for consumers and retailers.
New data may show a 1 per cent rise in retail spending, but it masks a “much larger drop” in volumes accounting for inflation.
“The sales we have put out today, they are measuring the pound value of retail sales in October, compared to the pound value of retail sales last October. And they show there was a small increase, about 1.6 per cent year on year,” she told Radio 4's Today show.
“But they are not … adjusted for inflation. So given that both our data, the shop price index, the ONS inflation data all show at inflation data running at historically high levels, that small rise in pound value of sales masks a much larger drop in volumes in the numbers of items we are actually buying once inflation is accounted for.”
A report from CBI Economics showed retail sales began falling in the summer.
“According to the CBI’s Distributive Trades Survey, July 2022 marked the fourth consecutive month in which retail sales have failed to grow and retailers expect a 14 per cent contraction in sales in August, including a 22 per cent fall in online sales,” said the report, Making a positive impact: The contribution of retail and wholesale to communities and the economy.
“As inflation continues to squeeze incomes and reduce spending power, household spending on non-essential goods is likely to remain subdued.
“This is evidenced by a fall in consumer confidence over the second quarter of 2022.”
