UK food price inflation surges to new highs despite falling wholesale costs

UK food price inflation surges to new highs despite falling wholesale costs

Proactive Investors - Food inflation hit record highs in March, the ninth continuous month of double-digit rises, as a shortage of fruit and vegetables added to energy costs pushing up prices.

With grocery inflation of 17.5% households now face an £837 increase in annual shopping bills, according to Kantar, which compiles supermarket till data from chains including Tesco PLC (LON:TSCO), J Sainsbury (OTC:JSAIY) , Ocado Group PLC (LON:OCDO), Aldi and Lidl.

Wider industry data was also released by Nielsen and the British Retail Consortium, showing food prices were 15% higher in March than a year ago, the highest rate since this set of figures was first recorded in 2005, and up from 14.5% in February.

This is in spite of global wholesale food costs dropping for at least 10 consecutive months.

The overall BRC-Nielseon shop price index was 8.9%, with non-food inflation at 5.9%, up from 5.3% a month earlier.

Inflation was prompted by high energy costs, a weaker pound pushing up import costs and shortages of fruit and veg coming from Europe and Africa, the BRC explained.

Kantar said the number of baskets containing tomatoes, cucumbers or peppers in the 10 major grocers stayed at 17% in March, the same as February, while at independents the volumes of tomatoes, peppers and cucumbers in baskets rose 32%, 26% and 21% respectively in these stores.

Shoppers are also hunting around for the best value, said McKevitt, with supermarkets "battling it out to demonstrate value and get customers through their doors... and if people don’t like the prices in one store they will go elsewhere, with consumers visiting three or more of the top 10 retailers in any given month on average".

Discounters Lidl and Aldi have led the way with rises, having lifted prices by 24.4% and 22.7% respectively in February, as per Which? data last week.

Which supermarket had the fastest rising prices? – Which?

Helped by price rises, Lidl was the fastest growing supermarket, Kantar said, scoring a 25.8% growth in sales, closely followed by Aldi, which marked a 25.4% rise, outdoing other major players Tesco PLC (LSE:TSCO), J Sainsbury PLC (LSE:SBRY) and Asda, which all saw sales up around 7%.

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