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Consumers have been hit by rising prices on supermarket shelves after food price inflation rose for the first time since March 2023 in July and August.
Data from research firm Kantar shows supermarket prices rose 1. 8% in the four weeks to August 4, up from 1. 6% in early July, even as index inflation figures key consumer prices slowed.
According to Kantar, food costs are now increasing in 182 product categories, while costs in another 89 categories are decreasing.
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The increases coincided with a busy summer, with spectators buying gear for events such as Euro 2024, Wimbledon and the Paris Olympics.
Food price inflation hit its lowest level in three years in July, but while the latest data ends 17 straight months of decline, Fraser McKevitt, director of retail and consumer information, notes that it marks a return to the average levels seen in all five. years before the start of the cost-of-living crisis.
However, this knowledge will put pressure on this week’s most recent inflation numbers and may simply raise questions about whether there will be a further cut in interest rates.
Sales of takeaway food in supermarkets increased by 3. 8% in the four weeks between August 4, 2024 and last year, according to a study by Kantar.
But shoppers are more astute: Spending on reduced prices rose 15%, while sales of products at the usual price have remained stable.
Many ushered in the Olympics compared to drinks and snacks: wine sales rose as much as 35%, while nuts rose as much as 60% and chips rose as much as 10% on the Friday of the opening ceremony in Paris, compared to the week before.
England fans also roared at the Three Lions as the men’s team reached the Euro 2024 final, with £10m spent on beer that day, the most spent on a Sunday in over 3 years.
While the country applauded its stars, many took advantage of the warm weather to organize the barbecue.
Sales of burgers were up 32% compared to the same period last year, while sales of chilled prepared salads were up 22% and spending on ice cream was up 23%. But it’s not all laughter in the sun: 28% more is spent on cough drops while others fight COVID-19 and other summer colds.
“Shoppers will find that the type of product they put in their cart will determine the price they pay,” McKevitt says.
“They continue to take advantage of the wide diversity of promotions presented through grocery stores to keep food costs down. “
Shopping behavior changes depending on the economic environment, making it difficult to decide which are the most productive supermarkets for your investment portfolio.
Sainsbury’s appears to have been the most popular with buyers this summer, with market share up 0. 5 per cent in the 12 weeks to four in August from the same period last year, according to KantarArray.
This is the largest year-on-year increase in market share since July 1997 and is once again the fastest-growing classic supermarket, with sales up five percent.
Inflation is expected to rise, and emerging food costs may be just one factor.
This could delay further interest rate cuts by the Bank of England as it could spur further price increases.
“Higher food inflation will result in the numbers increasing pressure on inflation,” says Sarah Coles, senior financial analyst at Hargreaves Lansdown.
“It will not have as much impact as energy inflation, but it all adds up. »
It suggests that a rate cut in September is unlikely, especially when unemployment figures appear to indicate that the labor market is healthier than expected and that wage increases continue to outpace inflation, which may simply put more upward pressure. .
“The market still expects at least one additional rate cut before the end of the year, but it may not happen quickly, and if we have more symptoms of inflationary pressures in the coming months, we probably won’t. “Possibly not much movement before 2025,” he adds.
But Richard Carter, head of rates at Quilter Cheviot, is more optimistic.
“Food value inflation has declined particularly from where it was a year ago, the cost-of-living crisis, and the most recent increase appears to have been due in part to summer-related spending,” he says.
“Overall, food value inflation of around 2% is in line with the Bank of England’s CPI mandate and therefore does not prevent it from cutting rates in the coming months. Its main focus will be wage expansion and persistent price pressures in the service sector. “
Marc Shoffman is an award-winning freelance journalist specializing in business, personal finance, and real estate. His work has appeared in print and online publications ranging from FT Business and The Times to Mail on Sunday and The i. He is also the co-host of the money plan podcast In For A Penny.