Food, Glorious Food: UK Grocery Inflation Showed Signs Of Slowing Down

Food, Glorious Food: UK Grocery Inflation Showed Signs Of Slowing Down
Stéphane Renevier, CFA

about 2 months ago2 mins

What’s going on here?

UK grocery inflation showed signs of slowing down just in time for the holidays, letting Brits enjoy their festive favorites – no gruel in sight.

What does this mean?

Food’s been a major catalyst of inflation over the last couple of years, with blocked supply chains limiting supplies and making even everyday essentials more expensive. But now, it looks like the Bank of England’s inflation-fighting interest rate hikes are finally paying off. British grocery prices still climbed 6.7% higher in December, but the drop from November’s 9.1% increase marked the biggest slowdown since 2008. That was enough to pull cash-strapped Brits back into supermarkets: they made nearly 500 million trips to the shops in the month up to December 24th, the most at that time since before the pandemic. Their shopping carts weren’t sparse, either, with the average household spending an all-time high of £477 ($602) on groceries last month.

UK grocery price inflation

Why should I care?

For you personally: Lunch won’t come cheap.

Don’t stop watching the pennies yet, though. Prices might stop bloating at their current rate, but they won’t come down to where they were a few years ago. Think of it like this: a kilo of steak might “only” cost $19 instead of $18 a couple of months back, but that’s still hard to stomach when you’d pay $14 only two years ago – especially when your income hasn’t risen to match it.

For markets: Joy will cost you.

Those festive shoppers didn’t go completely merry, though. Holiday shopping is expensive at the best of times, so Brits went bargain hunting: almost a third of that December spending was on marked-down items. They sought out cheaper stores, too, with discount retailers Lidl and Aldi winning their biggest-ever market shares over the period. And because it’ll take a while for folk to rebuild their financial confidence, the discount duo could keep stealing business from pricier brands for some time.

UK grocery market share
Source: Kantar
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