London August 16 2022: Inflation on the weekly supermarket shop has hit a record level in the UK, pushing cash-strapped consumers to buy own-label products as they grapple with the surging cost of living.
Grocery price inflation hit 11.6% in the past four weeks, the highest level since Kantar started tracking the data in 2008, according to a statement Tuesday.
The stark increase means the average annual shop is set to rise by £533 ($642), or £10.25 every week, at a time when people are already trying to cope with soaring energy bills.
“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,” said Fraser McKevitt, head of retail and consumer insight at Kantar. “We’re seeing shoppers make lifestyle changes to deal with the extra demands on their household budgets.”
Store brand ranges are at peak levels of popularity too at 51.6% of the market versus branded products as shoppers economize on food costs. Britain’s third-largest grocer Asda’s new Just Essentials own-brand line already accounts for a third of its customers’ baskets, said Kantar.
Shoppers are also switching to discounters and in some cases asking checkout staff to stop at a certain figure to keep tabs on spending. Sales at both German discounters Lidl and Aldi rose faster than rivals over the last 12 weeks.
Britain’s supermarkets have said they are doing all they can to avoid passing on prices to shoppers but are also facing their own surging bills as energy and fuel costs rise. The grocers -- the biggest private sector employers in Britain -- are also grappling with escalating wage bills as they try and keep staff at a time when inflation means UK workers are seeing the real value of their wages fall at the fastest pace in at least two decades.
Aldi said this week it’s giving a pay rise of up to 9% for all hourly-paid employees in its UK warehouses. The supermarket has already announced two raises for its store workers this year. Britain’s “Big Four” grocers - Tesco Plc, J Sainsbury Plc, Asda and Morrisons, have also all increased wages or announced planned salary hikes for staff this year.
As Britons battle the worst inflation in 40 years, those working in shops are among the worst off, according to the Independent Food Aid Network. Two-fifths of UK supermarket employees earn below the real living wage and an increasing number use food banks, the organization said in May.
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With the outlook bleak for rising inflation, supermarkets will have a challenge to woo consumers in the months to come. The Bank of England warned earlier this month that inflation is expected to peak at 13.3% in October amid a surge in gas prices, and gains will remain elevated throughout 2023.