Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Sarah Butler and Phillip Inman

Average UK food bill rises by £454 a year as grocery inflation nears 14-year high

A woman pushes a trolley at a supermarket in London
UK shoppers sought ways to cut their food bills amid rising prices. Photograph: Neil Hall/EPA

Supermarket inflation is expected to reach the highest level since at least 2008 in August after rising to almost 10% this month, amid the worst squeeze on household budgets on record.

Families are facing a £454 increase in average annual grocery bills, adding pressure amid the cost of living crisis, with butter, milk and pet food among the biggest risers over the past year, according to figures from Kantar.

Wider consumer price inflation (CPI) for June is expected on Wednesday to hit 9.3%, up from 9.1% in May, underlining the impact of Britain’s cost of living crisis on households and businesses.

Consumer confidence surveys have hit record lows in recent months and businesses have reported steeply rising costs, especially from imported raw materials and higher wages.

Analysts said the increasing cost of food, petrol and energy was likely to persist while the war in Ukraine and economic sanctions on Russia continued to hold up exports from the two nations, pushing the UK into recession over the second half of the year.

Officials figures for May showed workers’ pay rose by only 4.3% without bonuses, trailing CPI by 3.7%.

A fifth interest rate rise this year by the Bank of England is expected to go ahead when the central bank’s policymakers meet next month, adding to borrowing costs.

The Bank has warned that it must slow consumer spending to bring down inflation, though many analysts believe the combined impact of rising prices and higher borrowing costs is likely to have a bigger impact and push the UK into a recession.

Kantar said grocery inflation of 9.9% in the four weeks to 10 July and soaring sales of ice-cream and sun lotion – up 14% and 66% respectively – underpinned the first rise in overall grocery sales since April last year.

The 0.1% rise was driven by Aldi and Lidl, both of which increased sales by more than 11%.

An additional 1.4 million households visited at least one of the discounters in the latest three months compared with last year as shoppers sought ways to cut their food bills amid rising prices.

Among the big four supermarkets, only Tesco increased sales, with Morrisons close to being overtaken by Aldi as the UK’s fourth-largest chain. Aldi controls 9.1% of the market against Morrisons’ 9.4% as the larger chains’ sales fell by 6.7%.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Grocery prices continue to soar to near record-breaking heights and have jumped by another 1.6 percentage points since last month. This is the second-highest level of grocery inflation that we’ve seen since we started tracking prices in this way in 2008 and we’re likely to surpass the previous high come August.

“All this means that people will be feeling the pinch during our first restriction-free summer since 2019. Taking a barbecue as an example, buying burgers, halloumi and coleslaw for some alfresco dining would cost you 13%, 17% and 14% more than it would have this time last year.”

He said buying enough for a typical family barbecue would cost £9.94, just over 10% more than last year.

Meanwhile a survey by the consultancy firm Deloitte found that a majority of finance directors believe a recession is imminent, amid rising costs eating into consumer demand and worker shortages caused by the pandemic, while the UK’s exit from the EU hits their ability to meet orders.

The survey found that finance directors gave a 63% probability to experiencing a recession within the next year. More than two-thirds (68%) said high inflation would continue into next year and remain above the Bank’s 2% target in two year’s time.

Ian Stewart, a chief economist at Deloitte, said companies were building up financial reserves to cope with a more difficult period ahead.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.