UK grocery inflation falls to 2.1%
Newsflash: UK grocery inflation has fallen for the 16th month in a row.
Data firm Kantar reports that supermarket prices are 2.1% higher than a year ago this month, a slowdown on the 2.4% annual rise recorded in early May.
UK GROCERY PRICE INFLATION IN 4 WEEKS TO JUNE 9 WAS 2.1%, KANTAR SAYS
— Capital Hungry (@Capital_Hungry) June 18, 2024
Kantar reports that prices are now falling in nearly one third of the grocery categories it tracks, such as toilet tissues, butter and milk.
This slowdown in price rises should bring some relief to households, who were hit by grocery inflation of 17% in March 2023.
But Fraser McKevitt, head of retail and consumer insight at Kantar, warns that the squeeze on budgets isn’t over.
“The cost-of-living crisis isn’t over – far from it. 22% of households say they’re struggling, meaning that they aren’t able to cover their expenses or are just making ends meet.
“However, there are positive signs that many of us no longer feel the need to restrict our spending quite so much, with lower inflation helping to ease the pressure on people’s pockets.”
Key events
Retail analyst Nick Bubb says:
Well, grocery price inflation is not what it used to be, but it’s still a surprise to see Kantar report that the supermarket sector saw only 1.0% sales growth in the latest 4 week period…
Within the sector, Ocado was the fastest growing grocer for the fourth month in a row, increasing sales by 10.7% over the 12 weeks to 9 June.
Tesco’s sales were up 4.6% over the last 12 weeks, taking its market share to 27.7% – the highest market share since February 2022, while Sainsbury’s market share rose to 15.2%.
Discount retailer Lidl grew its market share to 8.1%, while rival Aldi has 10% of the market.
Suncream out, soup in, amid wet weather
Kantar reports that take-home grocery sales rose by just 1.0% over the four weeks to 9 June 2024, which is the the slowest increase since June 2022.
That’s partly due to the slowdown in inflation (as prices rose at a slower rate), but also the poor weather in May and June.
Kantar says the sixth wettest spring on record has hurt the grocery sector too, with much less demand for summer items such as suncream. Instead, we’ve been buying more soup!
Kantar’s Fraser McKevitt explains:
We’re not yet reaching for those typical summertime products and are making some purchases you wouldn’t expect in June.
Consumers bought nearly 25% fewer suncare items this month compared with last year, while prepared salads dipped by 11%. On the other hand, warming fresh soup sales jumped by almost 24%.
Kantar’s grocery inflation data will tee up tomorrow’s official UK inflation measure – due at 7am on Wednesday.
City economists predict the UK consumer prices index could slow to 2%. That would mean inflation would, finally, be back to the Bank of England’s 2% target, for the first time since July 2021.
UK grocery inflation falls to 2.1%
Newsflash: UK grocery inflation has fallen for the 16th month in a row.
Data firm Kantar reports that supermarket prices are 2.1% higher than a year ago this month, a slowdown on the 2.4% annual rise recorded in early May.
UK GROCERY PRICE INFLATION IN 4 WEEKS TO JUNE 9 WAS 2.1%, KANTAR SAYS
— Capital Hungry (@Capital_Hungry) June 18, 2024
Kantar reports that prices are now falling in nearly one third of the grocery categories it tracks, such as toilet tissues, butter and milk.
This slowdown in price rises should bring some relief to households, who were hit by grocery inflation of 17% in March 2023.
But Fraser McKevitt, head of retail and consumer insight at Kantar, warns that the squeeze on budgets isn’t over.
“The cost-of-living crisis isn’t over – far from it. 22% of households say they’re struggling, meaning that they aren’t able to cover their expenses or are just making ends meet.
“However, there are positive signs that many of us no longer feel the need to restrict our spending quite so much, with lower inflation helping to ease the pressure on people’s pockets.”
The Unite union has also supplied a report from an unnamed Whitbread worker, who says staff are worried about its plans for 1,500 job cuts.
The anonymous Whitbread worker says:
We are still only being drip fed information with little to no time to process or evaluate options.
“The collective consultation process seems to have mostly dismissed any ideas put forward by our reps making everything look like it is just a tick box exercise to try and cover Whitbread against any legal backlash.
“I feel I can speak for quite a few people when I say we’re all scared of what is coming. There are people out there not only losing their jobs but their homes too and there is little to no support from head office. We are now sat counting down the weeks wondering what will happen.”
Whitbread also owns several restaurant chains, including Beefeater, Brewers Fayre and Bar + Block.
It reports today that its total food and beverage sales (which fell 1% year-on-year) were boosted by strong breakfast sales driven by high occupancy at its hotels.
However, that was offset by softer trading in “a number of our branded restaurants”, Whitbread says (a sign that cash-strapped customers are cutting back on eating out, perhaps?).
Introduction: Whitbread confident, as unions protest over 1,500 job cuts
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The hotel sector can be a good gauge of economic confidence, tracking whether people are splashing out for trips away and if firms are stumping up for business trips.
And this morning, Premier Inn owner Whitbread has reported that recent trading in the UK has been “more encouraging”, as it prepares to face union anger over plans to cut 1,500 jobs.
The company says it remains “confident in the full year outlook”, after growing total sales by 1% to £739m, “driven by improved UK trading and continued progress in Germany”.
In its latest financial results, Whitbread reports that sales growth was flat (0%) in the UK for the 13 weeks to 30 May 2024, although it did grow by 15% in Germany (where trading had been weaker).
That 0% figure, though, hides a pick-up after a weak start to the first quarter of Whitbread’s financial year.
The company told shareholders:
Having been 1% behind last year in the first seven weeks, our trading performance strengthened during the remainder of the quarter and accommodation sales recovered to be in line with last year and up 55% versus FY20.
But, on a like-for-like basis, accommodation sales shrank by 2%, along with a 1% drop in food & beverage sales.
Whitbread reports that midweek business demand and peak leisure demand both remain “robust”, however last-minute demand for weekend stays has been “slightly softer”, particularly in London.
Perhaps the post-pandemic surge in trips away has faded?
Back in April, Whitbread reported strong results for the last financial year, including a 13% rise in sales in the year to 29 February.
Whitbread also says net inflation is now expected to be at the lower end of its guidance as a result of “increased cost efficiencies”.
The company, and its shareholders, will feel the wrath of the Unite union later today when they gather for its annual general meeting at its offices in Dunstable, Bedfordshire.
Unite are planning a protest over Whitbread’s plans, announced in April, to cut 1,500 jobs.
The union says Whitbread have refused to consult with them, or answer basic questions on the redundancy process.
Unite general secretary Sharon Graham said:
“Rarely is a company so shameless as to celebrate leaping profits and dividends by announcing mass job cuts.
“But generating runaway profits while trampling workers is business as usual for Whitbread. This is a firm that refuses to pay the real living wage and does not even provide company sick pay for its underpaid and overworked staff.
“Unite will be holding the company to account for its disgraceful race to the bottom behaviour and offering full support to our members impacted by these cruel and unnecessary redundancy plans.”
The agenda
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8am BST: Kantar’s grocery price inflation
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10am BST: Eurozone inflation rate for May (final estimate)
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10am BST: ZEW index of German economic sentiment
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1pm BST: Unite protest ahead of Whitbread’s AGM
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1.30pm BST: US retail sales for May
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2.30pm BST: Whitbread’s AGM begins
