Higher chocolate prices push up grocery prices in March
According to the latest data from market research company Kantar, higher prices for premium products pushed grocery prices up in March despite discounts on everyday items.
Grocery price inflation rose slightly to 3.5 per cent over the four weeks to March 23 compared with a year ago.
“With prices continuing to rise, supermarkets are mindful of the need to invest to attract shoppers through their doors,” Fraser McKevitt, head of retail and consumer insight at Kantar, said.
“Promotional sales ramped up this month to 28.2 per cent of total grocery spending, the highest level we’ve seen in March for four years.”
Prices rose fastest for chocolate confectionery, spreads and chilled smoothies, and fell fastest in pet food and household paper products, Kantar said.
Some of this is due to external environmental factors – the price of chocolate, for example, has been rising due to a global cocoa shortage caused by high temperatures and diseases in cocoa-producing regions.
“The rising cost of groceries ranks third on the list of concerns keeping consumers awake at night, just behind energy bills and the country’s overall economic outlook,” McKevitt added.
“While the number of people reported as financially struggling has fallen from its recent peak, this still accounts for almost a quarter of the country.”
Financial insecurity may be one of the reasons we’re all storing so much cash – ONS figures show that the saving ratio – the amount of disposable income that people choose to save – rose in 12 per cent in the fourth quarter, up from 8.3 per cent this time last year.
Tesco continues to rule the roost
Tesco’s share of the grocery market has continued to increase, reaching 27.9 per cent in the 12 weeks to March 23, according to Kantar.
The country’s second biggest employer – after the NHS – Tesco has cemented itself as the UK’s biggest grocer in the last decade.
The discounters continued to gain ground, too, with Aldi’s share of the market up 0.3 percentage points to 11 per cent year on year and Lidl’s up 0.4 percentage points to 9.1 per cent.
Sainsbury’s share of the market rose 0.1 per cent to 15.2 per cent.
The grocers have been aided by Asda’s troubles – the grocer’s share of the market dropped 1.1 percentage points year on year.
However, the market is primed for a battle, with returning Asda chair Allen Leighton recently unveiling his turnaround plan and ‘war chest’ to invest in lower prices.
“Trolley wars threaten to break out in the supermarket sector,” head of money and markets at Hargreaves Lansdown, Susannah Streeter, said.
“The supermarket chain is closing services seen as nice-to-have, but not essential, and scaling back its convenience footprint as it readies for a round of cost-cutting from rivals”.
But a price war would be good news for inflation, and may lighten the load for struggling families, particularly those lower income households.