Britons cut back on spending despite fall in grocery inflation, says Kantar

Britons have cut back on their supermarket shopping and traditional summer purchases because of recent poor weather, even though grocery price inflation slowed further, according to a report.

Supermarket prices were 2.1% higher than a year ago in the four weeks to 9 June, according to the retail researchers Kantar. This is down from May’s 2.4% inflation rate, and marks the 16th month that price rises have slowed. Kantar found costs are falling in nearly a third of the categories it tracks, including toilet tissue, butter and milk, an improvement from last year when just 1% of categories showed price declines.

The monthly report comes before official UK inflation figures for May on Wednesday. Headline inflation is expected to fall from 2.3% in April to 2%, the government-set target level.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said that despite falling grocery inflation, “the cost of living crisis isn’t over – far from it”. He said 22% of households said they were struggling, unable to cover their expenses or just making ends meet.

McKevitt added: “However, there are positive signs that many of us no longer feel the need to restrict our spending quite so much, with lower inflation helping to ease the pressure on people’s pockets.”

Even though 36% of households described their financial position as comfortable – the highest proportion since November 2021 – sales rose by just 1% in June, the slowest increase since June 2022, Kantar said. Footfall also dipped.

Wet weather meant shoppers bought nearly 25% fewer sun care items compared with last year, and 11% fewer prepared salads. At the same time, sales of fresh soup jumped by almost 24%.

McKevitt said: “The sixth wettest spring on record hasn’t just dampened our spirits leading into summer, it’s made a mark on the grocery sector too as it seems Britons are being put off from popping to the shops.

“We’re not yet reaching for those typical summertime products and are making some purchases you wouldn’t expect in June.”

Supermarkets and pubs are hoping for good performances from England and Scotland at the Euro 2024 tournament to boost spending, with the proportion of beer and lager promotions leaping to more than 40% in the last four weeks.

“Retailers will be competing with fans heading out of the house to watch the football as well as with each other,” said McKevitt. “Pubs especially could benefit from a boost – whether or not football comes home. Throughout the last tournament held in 2021, sales of food and non-alcoholic drinks in pubs soared by 60% compared with the average month that year.”

Tesco cemented its position as Britain’s biggest supermarket, with a market share of 27.7%, after sales rose 4.6% in the three months to 9 June compared with a year earlier. Sales rose at all of the big supermarkets over the period, apart from Asda, down by 4%, and Co-op, down by 2.3%.

Ocado was the fastest-growing grocer for the fourth month in a row, increasing sales by 10.7% over the 12 weeks to 9 June. Almost a quarter of British households (23%) did their grocery shopping online in the last three months, with more than 4% choosing to use Ocado.

Discounter Aldi, the fourth-largest retailer by consumer spend, boosted sales by 0.8%. It now has a share of 10%.