Inflation adds £133 to annual shopping bill
INFLATION has added the equivalent of “seven extra shops” to the average household’s annual grocery bill as supermarkets saw their highest sales growth in five years, figures show.
Supermarket sales growth accelerated to 5 per cent over the three months to June 18 – the strongest increase since March 2012 and a stark contrast to the 0.2 per cent fall of this time last year – Kantar Worldpanel data reveals.
The “robust” growth was helped by grocery inflation increasing to 3.2 per cent, which has added £133 to the average annual household shopping bill.
Fraser McKevitt, Kantar’s head of retail and consumer insight, said: “The market’s robust performance this period is partly down to particularly weak sales growth last year and a continuing increase in like-for-like grocery inflation, which is now running at 3.2 per cent.
“That’s an extra £133 on the average household’s annual shopping bill, or the equivalent of seven additional shopping trips a year.”
Meanwhile, figures from rival analysts Nielsen show shoppers spent four per cent more on groceries over the four weeks to June 17 than the same period a year ago.
Recent spates of hot weather caused sales of ice cream and cider to rise 12 per cent and 16 per cent respectively – even prior to last week’s heatwave.
Mike Watkins, Nielsen’s UK head of retailer and business insight, said hot weather and “creeping inflation” would continue to boost sales. He said: “The early summer weather gave supermarkets a much-needed shot in the arm.
“Looking ahead, a continuation in both the warm and dry weather and creeping inflation means growth should be maintained at around three per cent for at least the next few weeks.”
The figures come as the Bank of England’s Financial Policy Committee, headed by Governor Mark Carney, said it was tightening up affordability tests for mortgage lending, ensuring borrowers can meet repayments in the event that interest rates rise.
The Bank revealed a growing split among policy makers earlier this month, with three out of eight Monetary Policy Committee members voting for a rise in interest rates to 0.5 per cent due to concerns over inflation.
The move might be seen as preparing the way for an “unwinding” of the economyboosting package, including an interest rate cut to 0.25 per cent, which was unleashed after last year’s Brexit vote.