According to industry data, the inflation rate in the UK’s grocery sector has fallen to its lowest since February 2022, prior to Russia’s Ukraine incursion, suggesting a potential decline in escalating food prices. The annual inflation of groceries recorded a decrease to 4.5 per cent within the four weeks leading up to March 17, a drop from the previous month’s 5.3 per cent, as per data from the research firm Kantar.
Retail and consumer insight principal at Kantar, Fraser McKevitt, stated there had been a substantial dip in grocery inflation since it reached a shocking high of 19.2 per cent in March 2023, as calculated by official figures. The previous month the firm reported a drop in the prices of products such as butter, milk, and bathroom tissue.
Kantar’s data provides preliminary insights into the pressures on food pricing ahead of the official price statistics to be published on April 17. In February, the official food inflation decreased to 5 per cent from 7 per cent month-to-month, well below the peak of 45 years reached in March 2023. Costs of items such as chocolate, fruit and fish fell, with a slight yearly decrease in fish prices.
The aftermath of Russia’s invasion of Ukraine saw a ramp up in food costs, impacting low-income households the most as they allocate a larger portion of their earnings towards essentials. Food price hikes were primarily responsible for the larger-than-anticipated drop in official inflation to 3.4 per cent in February, down from 4 per cent the previous month, Kantar’s data suggesting this trend carried onto this month.
Governor of the Bank of England, Andrew Bailey, expressed last week that he had “an increasingly optimistic narrative” regarding inflation. “Global shocks are retracting and currently we aren’t witnessing much sticky persistence in inflation. This is the assessment we must continuously revisit.”
Market analysts are forecasting the Bank of England to initiate reducing interest rates from the 16-year peak of 5.25 per cent starting the summer season, bringing the benchmark rate to 4.5 per cent by the close of the year.
Additionally, Kantar’s data revealed an increase in sales of branded goods and shopping in upper-end supermarkets. The trend contrasts with what was observed for majority of the past two years. The online luxury retailer Ocado experienced the quickest sales growth for the month at a rate of 9.5 per cent, assisted by a continuous voucher campaign that drew in more customers.
In the most recent month, purchases of name-brand products slightly exceeded those of store brands, with a rise of 6.1 per cent and 4.7 per cent respectively. – All rights reserved by The Financial Times Limited 2024.