UK grocery inflation eases for fourth consecutive month

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UK grocery price inflation eased for a fourth consecutive month in July to the lowest rate this year, according to research published on Tuesday.

The annual pace of grocery price growth eased to 14.9 per cent in the four weeks to July 9, down from 16.5 per cent in the previous month, according to research company Kantar, the largest monthly slowdown since its peak in March.

Fraser McKevitt, head of retail and consumer insight at Kantar, said the slowdown in grocery inflation “will be good news for many households although, of course, the rate is still incredibly high”.

He added that because wholesale energy and food prices soared in the summer of 2022 following Russia’s invasion of Ukraine “this latest slowdown is partially down to current figures being compared with those higher rates one year ago”.

The figures come ahead of official inflation data for June, which will be published by the Office for National Statistics on Wednesday. Economists polled by Reuters expect the headline figure to decline to 8.2 per cent from 8.7 per cent in May.

Last month’s official figures showed that while price growth for food and non-alcoholic beverages was historically high, it eased to 18.3 per cent in June from 19 per cent in May.

Susannah Streeter, head of money and markets at financial services company Hargreaves Lansdown, cautioned that with Russia exiting the Black Sea grain deal and refusing to guarantee safe passage for ships exporting wheat and corn there were concerns about food prices “staying sticky”.

UK food inflation remains far higher than in the US, where it is currently 5.7 per cent, and the eurozone, where it stands at 12.5 per cent. Victoria Scholar, head of investment at online investment platform Interactive Investor, said this is partly because of the UK’s “reliance on imports from abroad and freak weather conditions that have limited crop supplies”.

There have been concerns that supermarkets are “profiteering” from the inflationary environment by raising prices more than necessary, something they strongly deny.

Kantar revealed that cheaper supermarkets were the best performing food retail companies. Aldi was the fastest-growing grocer, with annual sales up by 24 per cent. That pushed its market share to 10.2 per cent, up from 9.1 per cent a year ago. Lidl reported a similar increase in sales and rising market shares.