Consumers face rising supermarket prices as inflation hits 3.5%

In the United Kingdom, recent data from analysts at Kantar revealed that supermarket prices experienced an increase of 3.5% compared to the previous year, marking a rise from 3.3% in February. Grocery price inflation has become a pressing concern for consumers, ranking just behind energy bills in their list of worries regarding financial stability. Despite a slight decrease from 3.7% in December, consumers continue to grapple with the impact of rising food costs. Additionally, promotional spending in supermarkets hit its highest level in four years, constituting 28.2% of total grocery sales as grocers battle for customer loyalty amid economic pressures. Fraser McKevitt, the head of retail and consumer insight at Kantar, indicated that around 22% of the population remains financially strained, highlighting the ongoing economic challenges faced by households. The increasing cost of groceries was identified as the third largest concern among consumers, closely following energy bills and overall economic outlook. Interestingly, even in the face of financial worries, household spending on seasonal confectionery, like chocolate eggs, surged to £134 million in the previous month, with more than a third of households purchasing hot cross buns ahead of Easter. Unless the overall economic situation improves, these patterns suggest consumers are finding ways to continue their traditions, albeit in a financially conscious manner. In the competitive grocery market, Aldi celebrated a milestone as its share reached 11% for the first time, with sales growth of 5.6%. Similarly, Lidl's sales grew by 9.1%, attracting 385,000 new shoppers, while Ocado maintained its position as the fastest-growing grocer with an impressive 11.2% increase in sales. Even Marks & Spencer saw a remarkable rise in grocery spending by 13.1%, indicative of a shift in consumer behavior. Tesco's growth was substantial, with a 5.4% increase in sales, amounting to almost half a billion pounds more compared to the previous year, marking a gain in market share from 27.3% to 27.9%. Furthermore, Sainsbury’s extended its streak of year-on-year growth, achieving 35 consecutive periods with sales up by 4.1% and a market share of 15.2%. These contrasting trends reflect both the challenges households face with rising prices and the dynamic response of supermarkets to retain and attract customers during this inflationary period.