Supermarket prices rise at fastest rate in four years

Grocery prices rose at their fastest rate in four years over the past three months, with a supermarket sales increase almost entirely due to inflation, figures show.
A typical family could pay an extra 144 a year for their groceriesA typical family could pay an extra 144 a year for their groceries
A typical family could pay an extra 144 a year for their groceries

The latest rise in inflation - now at 3.4% - means a typical family could pay an extra £144 a year for their groceries if the pace continues, Kantar Worldpanel said.

Sales across the market over the 12 weeks to November 5 were up 3.2% on last year, but this was almost all down to the rising rate of inflation, according to Kantar's analysis.

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Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: "Volume sales have increased by less than 1%, meaning it's price rises keeping supermarket performance buoyant.

"Like-for-like grocery inflation now stands at 3.4%, its highest level since November 2013. With the average shop currently costing £18.26, consumers are now paying an extra 62 pence each time and over the course of a year it could add £143.70 to a typical family's grocery bill."

Most grocery products were more expensive, with prices rising fastest in categories such as butter, where a milk shortage has pushed up prices, fish and cola.

Prices fell for only a few product categories, including crisps and fresh poultry.

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Prices have been rising since the start of this year following 30 consecutive periods of deflation from September 2014 to December 2016 as supermarkets engaged in a fierce price war.

Lidl was Britain's fastest-growing supermarket for the fifth consecutive period, with sales up 15.1% helped by new store openings.

Some 10.6 million households visited Lidl at least once during the past three months, boosting the grocer's market share by 0.5 percentage points to 5.1%, while sales at Aldi, which attracted 11.9 million households during the same period, increased by 13.1% to boost market share to 6.7%.

Sainsbury's grew sales by 2.6%, attracting an additional 364,000 shoppers to become the fastest grower among the big four for the first time since April last year.

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Tesco welcomed 76% of British households during the past 12 weeks, growing sales by 2.3% as its market share dipped to 28%, down 0.2 percentage points on last year, while Morrisons saw sales increase by 2.1% accompanied by a marginal fall in share from 10.5% last year to 10.4% during the latest quarter.

Asda enjoyed its eighth consecutive period of growth, the longest run of sales increases the retailer has seen since March 2014 as both cheaper and more premium own label lines delivered an overall 1.5% year-on-year sales boost.

Consumers bought 10.1 million packs of traditional Christmas biscuits in October as shopping for the festive season "well and truly started", Kantar said.

Mr McKevitt said: "Consumers have already been digging deep in preparation for the holiday season, buying 10.1 million packs of traditional Christmas biscuits in October alone. Alcohol sales have ramped up too, increasing by 5.3% year on year as shoppers parted with an extra £142 million on their favourite tipples.

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"The British public is only just getting started when it comes to Christmas shopping, and is expected to shell out a whopping £28.7 billion at the grocers in the final 12 weeks of 2017."

Figures from analysts Nielsen show Tesco enjoying the fastest growing sales of the big four for the eighth consecutive month, up 2.7% year-on-year for the 12 weeks to November 4, noticeably ahead of 2.1% for Sainsbury's, 1.8% for Morrisons, and 1.7% for Asda.

Mike Watkins, Nielsen's UK head of retailer and business insight, said: "Tesco has maintained good momentum ahead of the all-important Christmas trading season.

"At the same time, like all the supermarkets, they've had to tread a fine line around holding back at passing on cost price increases to compete with the discounters."

Nielsen found UK grocery sales increased 3.1% across the whole market for the four weeks ending November 4.