Food inflation is gathering pace once more, eroding household budgets and driving prices upwards across the sector.
Grocery inflation reached five per cent during the four weeks ending August 10, dropping from 5.2 per cent the previous month but remaining significantly above the broader º£½ÇÊÓƵ rate of 3.6 per cent, as reported by .
Actual wage growth, when adjusted for inflation, stood at approximately one per cent in July.
"We've seen a marginal drop in grocery price inflation this month, but we're still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet," Fraser McKevitt, head of retail and consumer insight at Worldpanel, said.
"What people pay for their supermarket shopping often impacts their spending across other parts of the high street too, including their eating and drinking habits out of the home... casual and fast service restaurants especially have seen a decline in visitors over the summer."
Visits to casual dining establishments dropped six per cent year on year during the three months to July 15.
Sales at the grocers rise
Total grocery sales expanded by four per cent in August, based on the most recent data from Worldpanel by Numerator.
Lidl and Ocado shared the lead as the most rapidly expanding supermarkets during the 12 weeks to August 10, with turnover at both chains rising by 10.7 per cent versus the corresponding period last year. Tesco maintained its position as the º£½ÇÊÓƵ's largest grocer, achieving its most substantial monthly market share increase since December 2024, with its grip on the market expanding by 0.8 percentage points to 28.4 per cent.
Revenue climbed 7.4 per cent year on year.
Asda persisted in shedding market share, contracting by 0.9 percentage points year on year whilst experiencing a 2.6 per cent decline in sales.
Digital sales across all retailers increased by 6.7 per cent over the 12 weeks.
Inflation: Why are º£½ÇÊÓƵ food prices rising?
Worldpanel has calculated that Britons' typical household expenditure at supermarkets has now reached £5,283 annually, a sum which could climb by £275 by year-end.
The cost of fresh essentials, including butter, red meat, and chocolate have fuelled the rise in grocery inflation.
"The pressure on food and drink manufacturers continues to build... rising costs are gradually making their way into the prices shoppers pay at the tills," sustainability director at The Food and Drink Federation (FDF), Balwinder Dhoot, said.
These challenges encompass elevated labour expenses following tax increases in April, alongside reduced harvests resulting from severe weather conditions and a critical scarcity of carbon dioxide utilised in agriculture.
"Despite fierce competition between retailers, the ongoing impact of the last budget and poor harvests caused by the extreme weather have resulted in prices for consumers rising," Kris Hamer, insight director at the British Retail Consortium, said. The sectors that the º£½ÇÊÓƵ has traditionally depended on – livestock and arable crops – are facing considerable strain.
Both beef and lamb farming are grappling with declining cattle numbers and escalating costs for feed, energy and transport.
A carbon dioxide shortage, triggered by the shutdown of ammonia plants – as CO2 is a byproduct of the fertiliser production process – due to soaring energy costs, has also resulted in a deceleration in production on º£½ÇÊÓƵ farms.
