Britain’s drought is going to push up food prices even higher than the 11.6 per cent rise costing shoppers more than £530 extra a year, a supermarket boss warned on Tuesday.
Iceland boss Richard Walker also stressed that the impact of the eye-watering inflation on groceries was going to go on for “quite some time yet”.
He gave the bleak outlook after latest figures from market researchers Kantar put grocery price inflation at 11.6 per cent over the past four weeks, compared to a year ago, the highest since this data trend was started in 2008.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “As predicted, we’ve now hit a new peak in grocery price inflation, with products like butter, milk and poultry in particular seeing some of the biggest jumps.
“This rise means that the average annual shop is set to increase by a staggering £533, or £10.25 every week, if consumers buy the same products as they did last year.”
Cash-strapped families are having to make cutbacks, with a move to buying cheaper products as the UK faces plunging into recession.
Mr McKevitt added: “It’s not surprising that we’re seeing shoppers make lifestyle changes to deal with the extra demands on their household budgets.
“Own-label ranges are at record levels of popularity, with sales rising by 7.3 per cent and holding 51.6 per cent of the market compared with branded products, the biggest share we’ve ever recorded.”
Mr Walker explained that the high food prices were not expected to quickly start to fall after farmers have suffered from the scorching summer.
“It’s going to be really tough,” he told BBC Breakfast.
“As well as the war in Ukraine, and commodity price inflation and everything else in between, we have a drought in this country which is going to affect crop yields in September and October. So it’s one thing after another.
“Food inflation officially is around ten per cent. Of course, it’s much higher than that and people see that in terms of the price of milk etc..
“Unfortunately, this is going to be a challenge for all of us for quite some time yet.”
In a sign of the scale of the crisis, Iceland is offering shoppers short-term, interest-free loans of £25 to £75 to help them through difficult patches rather than having to rely on food banks or other support.
Mr McKevitt said people are shopping around between retailers to find the best value products.
During the financial crisis in 2008, supermarkets were offering many promotions to customers.
“It’s harder to hunt out these deals in 2022 – the number of products sold on promotion is at 24.7 per cent for the four weeks to 7 August 2022, while 14 years ago it was at 30 per cent,” he said.
“Instead, supermarkets are currently pointing shoppers towards their everyday low prices, value-ranges and price matches instead.”
He added: “Over the past month we’ve really seen retailers expand and advertise their own value ranges across the store to reflect demand. Consumers are welcoming the different choices and options being made available to them on the shelves, with sales of own-label value products increasing by 19.7 per cent this month.
“As an example, ASDA’s Just Essentials line, which launched this summer, is already in 33 per cent of its customers’ baskets.”
