The latest supermarket sector data before the election shows that the pace of price growth is still at its lowest level since October 2021, but more than a fifth of consumers are still struggling to make ends meet.
Inflation in the food sector has fallen for the 16th month in a row, according to industry data released ahead of the general election, which also shows a price war aimed at luring fans during Euro 2024.
Kantar Worldpanel – which tracks supermarket prices, sales and market share – said grocery inflation fell to 2.1% in the four weeks to June 9, down from 2.4% the month before.
This left the figure at its lowest level since October 2021 – just months before the war in Ukraine triggered an unprecedented jump in prices and became a key part of the energy-driven economy. cost of living.
The report shows that there is still upward pressure on the costs of, among other things, chilled fruit juices, vitamins and supplements and chocolate confectionery – the latter is a result of poor cocoa harvests.
Prices continued to fall fastest for toilet paper, butter and milk, the study said.
Kantar said that despite progress in reducing the pace of price increases at the checkout, including the impact of cross-chain discounts, the research found that 22% of supermarket customers continued to struggle to make ends meet.
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However, a larger share of shoppers felt better off.
The report shows that 36% consider their financial position to be ‘comfortable’, a level that has not been surpassed since November 2021.
This can largely be explained by the fact that wage growth has been higher than inflation for more than a year. Official figures last week showed basic pay rising 6%.
But despite improving personal finances, Kantar reported a hit to sales growth at grocers. It blamed the fall in supermarket inflation for the fallout from the sixth wettest spring on record.
According to the report, consumers bought nearly 25% fewer sunscreen products in the past four weeks compared to last year, while prepared salads fell 11%. Sales of fresh soup, on the other hand, increased by almost 24%.
Fraser McKevitt, head of retail and consumer insights at Kantar, said promotional competition for business between supermarkets has evolved to target football fans.
“With the UEFA European Men’s Football Championship approaching, supermarkets will wait to see whether positive performances from England and Scotland can also deliver a win at the box office.
“Grocers are trying to entice consumers to enjoy this year’s tournament, with the share of sales of beer and lager on promotion rising by more than 40% in the past four weeks.
“Retailers will be competing with fans who leave home to watch football, but also with each other.
“Cafes in particular could benefit from a boost, regardless of whether football comes home or not.
“During the last tournament held in 2021, sales of food and non-alcoholic drinks in pubs increased by 60% compared to the average month of that year.”
Kantar’s report was the latest in the run-up to the election and was published less than 24 hours before the latest official inflation figures.
They are tipped off by a poll of economists carried out by Reuters news agency, which shows that the main consumer price index (CPI) shows inflation slowing to 2.3% in the 12 months to May from 2.3% the month before. 2%.
The interest rate level would then remain at the Bank of England’s target rate of 2%.
However, progress is not expected to result in a rate cut on Thursday, as a majority of the Bank’s rate-setting committee is concerned that inflation will rise again in the second half of the year.
The financial markets currently see only a 9% chance that the bank rate will be cut from 5.25% to 5% this week.