Grocery inflation has eased for the 16th month in a row, according to industry data released ahead of the general election also showing a price war aimed at luring fans during Euro 2024.
Kantar Worldpanel – which tracks supermarket till prices, sales and market share – said its measure of grocery inflation slowed to 2.1% in the four weeks to 9 June from 2.4% the previous month.
That left the figure at its lowest level since October 2021 – just months before the war in Ukraine prompted an unprecedented leap in till prices, becoming a key plank of the energy-driven cost of living crisis.
The report showed there is still upward pressure on the cost of items such as chilled fruit juices, vitamins and supplements and chocolate confectionery – the latter a consequence of poor cocoa harvests.
Prices were still falling fastest in toilet tissues, butter and milk, the study said.
Kantar said that despite progress in bringing down the pace of price rises at the tills, which has included the impact of discounting among chains, its survey work showed 22% of supermarket customers continued to struggle to make ends meet.
A greater proportion of shoppers, however, were feeling better off.
The report suggested that 36% saw their financial position as ‘comfortable’, a level not surpassed since November 2021.
It can be mostly explained by pay growth outstripping inflation for more than a year. Official figures last week showed basic pay rising at a pace of 6%.
But despite improving personal finances, Kantar reported a hit to revenue growth values among grocers. It blamed the easing in grocery inflation and an impact from the sixth-wettest spring on record.
It said that consumers bought nearly 25% fewer suncare items over the four-week period compared with last year, while prepared salads dipped by 11%. Fresh soup sales, on the other hand, jumped by almost 24%.
Fraser McKevitt, Kantar’s head of retail and consumer insight, said promotional competition for business among supermarkets had evolved to target football fans.
England and Scotland are competing in Euro 2024. Pic: Reuters
“With the men’s UEFA European Football Championship under way, the supermarkets will be waiting to see if positive performances by England and Scotland can deliver a win at the tills too.
“The grocers are looking to entice in consumers enjoying this year’s tournament, with the proportion of beer and lager sales on promotion leaping up to over 40% in the latest four weeks.
“Retailers will be competing with fans heading out of the house to watch the football as well as with each other.
“Pubs especially could benefit from a boost – whether or not football comes home.
“Throughout the last tournament held in 2021, sales of food and non-alcoholic drinks in pubs soared by 60% compared with the average month that year.”
Kantar’s report was the last ahead of the election and released less than 24 hours before the latest official inflation figures.
They are tipped by a poll of economists, carried out by the Reuters news agency, to show the main consumer prices index (CPI) measure of inflation slowing to 2% in the 12 months to May from 2.3% the previous month.
That would leave the rate level with the Bank of England’s 2% target rate.
However, the progress is not expected to result in an interest rate cut on Thursday because a majority of the Bank’s rate-setting committee are worried about inflation ticking up again during the second half of the year.
Financial markets currently see just a 9% chance that the Bank rate will be cut to 5% from 5.25% this week.