Yahoo Finance UK supermarket prices rise at fastest pace since 2012 as inflation hits
Britain's supermarket prices surged at their fastest rate in nearly a decade this month as household budgets come under more pressure and the cost of living crisis deepens.
Grocery price inflation hit 5.2% over the four weeks to 20 March, the highest since April 2012, according to data analytics firm Kantar.
Prices for everyday items such as savoury snacks and dog and cat food were rising the fastest, while prices fell for fresh bacon, Kantar said.
The report found British shoppers are now turning to own-brand labels, which tend to be cheaper than branded ones, accounting for over 50% of all spending, versus 49.9% this time last year.
Trips to grocery stores also declined for the first time in a year thanks to the easing of lockdown restrictions, though the data firm said higher fuel prices could also be to blame.
"Higher fuel prices could be playing a role here too as people try to save petrol by visiting the supermarkets less often," said Fraser McKevitt, head of retail and consumer insight at Kantar.
Kantar said German discounters were leading the pack as both bucked the wider decline, with Aldi achieving a record market share of 8.6% and Lidl matching its best performance at 6.4%. Both chains increased sales by 3.6% year-on-year.
The UK's largest supermarket Tesco (TSCO.L) was the only other retailer performing ahead of the market, taking a 27.4% share, up from 27.1% during the same time in 2021.
Rivals Sainsbury’s (SBRY.L) market was 15.1%, while Asda holds 14.5%, and Morrisons 9.5%.
Co-op, Waitrose and Iceland’s shares are 6%, 4.8% and 2.2% respectively, while online grocer Ocado (OCDO.L) has 1.8% of the market.
Despite the surging prices, overall supermarket sales fell by 6.3% this month, reflecting a return to the office and increased socialising as COVID restrictions ended.
McKevitt added: "More and more we’re going to see consumers and retailers take action to manage the growing cost of grocery baskets.
"Grocers are also adapting their pricing strategies in response to the rising cost of goods.
"One trend we’re already tracking is the move away from selling products at 'round pound' prices. The percentage of packs sold at either £1, £2 or £3 has dropped significantly from 18.2% last year to 15.9% this March."
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On Monday, Iceland said it was reversing back to using palm oil in its own-label food as the price of sunflower oil has rocketed by 1,000% since the start of the Ukraine war.
In 2018, the grocery store committed to eliminating palm oil from its products, replacing it with sunflower oil. However, the disruption in the supply chain due to Russia’s invasion of Ukraine has made sunflower oil "totally unobtainable", Iceland’s managing director Richard Walker said.
UK inflation hit a 30-year high of 6.2% in February, its highest level since March 1992, and up from 5.5% in January.
The Office for Budget Responsibility (OBR) warned last week that UK living standards are set for the biggest drop on record as higher inflation will cut household disposable incomes by 2.2% on a person-by-person basis in 2022-2023.
The OBR predicts inflation will hit a 40-year high to 8.7%, with energy bills poised to rise £830 a year from October, contributing to the biggest fall in living standards since at least the 1950s.
