Food inflation soars to record 13.3% as Christmas grocery spending hits new high

Rebecca Barry reports as food inflation rockets to 13.3%

The price of food for shoppers jumped to 13.3% in December, up from 12.4% in the previous month, according to the British Retail Consortium (BRC).

Soaring prices, driven by the high cost of animal feed, fertiliser and energy caused by the war in Ukraine, are reflected in British households’ spending on traditional Christmas food items last month.

New figures from market research firm Kantar on Wednesday suggest grocery sales hit over £12bn in the month leading to Christmas Day, the highest amount on record.

But the total value of sales has risen because of the increasing cost of food and drink, rather than because people are spending more, analysis showed.

Kantar’s monthly report analysing the spending habits of 30,000 households across Britain also showed:

  • The amount of money spent on mince pies climbed by nearly a fifth in December, despite the volume of sales barely increasing at all.

  • People spent 16% more on Christmas puddings, but only 6% in terms of volume.

  • Sales of stores’ own brands surged by 13.3% in December, compared with a 4.7% rise in branded lines.

  • Many retailers also increased their ranges of premium own-label products over Christmas, with sales of those lines growing by 10.2% and hitting more than £700 million in total for the first time.

  • Tesco’s Finest range came out on top in terms of sales, while Aldi and Lidl enjoyed significant growth in their premium own-labels.

  • Meanwhile, the supermarket giants continue to dominate spending for UK shoppers, with Tesco, Sainsbury’s, Asda and Morrisons accounting for more than two-thirds of all spending.

  • However, Aldi held on to its title of fastest-growing grocer, enjoying a 27% surge in year-on-year sales and taking its share of the market to 9.1%, from 7.7% this time last year.

Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “It was a challenging Christmas for many households across the UK.

“Not only did the cold snap force people to spend more on their energy bills, but the prices of many essential foods also rose as reverberations from the war in Ukraine continued to keep high the cost of animal feed, fertiliser and energy.”

Fresh food inflation leapt to 15% for the month from 14.3% in November, while the price of ambient food, such as pasta and tinned food, increased 11% in December against the same month a year earlier.

Inflation is the rate at which prices are rising.

However, non-food shops, such as fashion or homeware retailers, saw inflation slow to 4.4% in December from 4.8% a month earlier due to price cuts.

The new food inflation figures come as the latest BRC-NielsenIQ shop price index showed a slight sign of respite for cash-strapped shoppers, as overall shop price inflation eased slightly to 7.3% for the month.

It pulled back marginally from 7.4% in November but remains close to record highs.

Ms Dickinson added: “Non-food price rises eased as some retailers used discounting to shed excess stock built up during the disruptions to supply chains, meaning some customers were able to bag bargain gifts.

“The combined impact was that price increases overall plateaued, with the reduction in non-food inflation offsetting the higher food prices.”

UK food prices rose at a record rate in December, new figures suggest. Credit: PA

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Consumer demand is likely to be weak in Q1 due to the impact of energy price increases and for many, Christmas spending bills starting to arrive.

“So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mind-set around personal finances in the near term.

“With shoppers having less money to spend on discretionary retail, having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”

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