Market Analysis

UK grocery inflation edged higher this month for the first time since March 2023, industry data showed on Tuesday.

Market researcher Kantar said annual grocery price inflation was 1.8% in the four weeks to Aug. 4, versus 1.6% in the previous four week period.

“Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly," Fraser McKevitt, head of retail and consumer insight at Kantar, said.

"While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.”

The British Retail Consortium warned last month that renewed inflationary pressures could be on the way as the effect of last year's fall in commodity prices fades and climate change damages harvests following unusually wet weather in England and extreme heat elsewhere.

Kantar said prices are rising fastest in markets such as vitamin and mineral supplements, fruit juices and drinks and chocolate confectionery and are falling fastest in toilet tissues, bottled cola drinks and dog food.

Official data published last month showed overall UK inflation held at 2% in June, lower than in the United States and the euro area. Data for July will be published on Wednesday and is expected to show an increase.

Kantar's data, the most up-to-date snapshot of UK consumer behaviour published since the July 4 national election, showed take-home grocery sales rose 3.8% in value terms over the four-week period year-on-year.

It said sales of wine, beer and snacks were boosted by the closing stages of the Euro 2024 soccer championship and the start of the Paris Olympics. Barbecue food sales were boosted by the return of some better weather.

Over the 12 weeks to Aug. 4, online supermarket Ocado (LON:OCDO) was again the fastest growing grocer with sales up 11.3% year-on-year, Kantar said.

Market leader Tesco (OTC:TSCDY) saw growth of 4.9%, while sales at No. 2 Sainsbury's rose 5.2%.

No 3 Asda was again the laggard, with sales down 6.0% and it lost 1.1 percentage points of market share year-on-year.

Last week, Asda reported a 5.3% fall in second quarter sales.

Paraphrasing text from "Reuters" all rights reserved by the original author.