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UK grocery price inflation slows to 6.7% as retailers enjoy busiest Christmas since 2019, data shows – business live


UK grocery price inflation slows to 6.7%, data shows

Grocery price inflation in the UK slowed to an annual rate of 6.7% in December, while retailers enjoyed their busiest Christmas since 2019, according to the data firm Kantar.

Inflation is now at its lowest level since April 2022, but many consumers are still feeling the pinch. Prices for sweets, eggs and frozen potato products rose fastest but prices fell for dairy items, including butter, milk and cream.

Fraser McKevitt, head of retail and consumer insight at Kantar, said:

The rate of inflation is coming down at the fastest pace we have ever recorded, but consumers are still facing pretty hefty pressures on their budgets. Retailers were clearly working hard during the festive period to offer best value and win over shoppers, and promotions were central to their strategy. Nearly one third of all spend in the four weeks to Christmas Eve was made on items with some kind of offer, the highest level since December 2020 and £823 million more than last year.”

Britons made 488m trips to the supermarkets over the four weeks to 24 December, 12m more than a year earlier, and the largest number at Christmas since pre-pandemic times. A record £13.7bn passed through the tills last month, with the average household spending an all-time high of £477.

The discount chains Aldi and Lidl hit their highest ever market shares for the festive period while Britain’s two biggest supermarkets, Tesco and Sainsbury’s, were also among Christmas winners.

Lidl’s sales grew 13.8% year-on-year in the 12 weeks to 24 December and Aldis were up 9.9% taking their combined market share to 17%. Sainsbury’s sales rose 9.3% while Tesco’s sales were up 7.5%.

Shoppers spent £13.7bn on groceries in the run-up to Christmas – 7% more than a year before – as they sought out bargains and switched to discounters to try to offset price inflation.

Fraser McKevitt explained:

As we expected, this Christmas was a whopper. Friday 22 December turned out to be the most popular shopping day, when just over 25m trips were made and consumers spent £803m in physical stores – that’s 85% more than the average Friday in 2023. Online’s share of the market held steady at 11.6%, as nearly one in five households got a delivery in for the big day.

Santa’s sleigh and reindeer parking space is painted on the roof of Aldi, in Knutsford.
Santa’s sleigh and reindeer parking space is painted on the roof of Aldi, in Knutsford. Photograph: Molly Darlington/Reuters

Key events

Turkey’s inflation rate rises to nearly 65%

In Turkey, it’s a different picture.

Annual inflation climbed to 64.77% in December, from 62% in November, according to official figures. The upward trend is expected to continue in coming months after a big rise in the minimum wage.

Inflation ended the second year in a row at almost 65% for the first time since the late 1990s. The reading is in line with forecasts from the central bank and the government.

The government’s decision to raise the official minimum wage by nearly 50% is likely to push inflation even higher in the coming months. It could go beyond 70% by May. This will mean more interest rate hikes, following seven rises since June.

The central bank expects inflation to slow in the second half of this year, to 36% by the end of the year — still more than seven times the official target. Governor Hafize Gaye Erkan will present fresh forecasts in February.

Policymakers have warned that domestic demand, along with “stickiness in services inflation,” are among the main factors pushing up prices. In December, restaurant and hotel prices jumped 93% year-on-year, while overall services inflation nearly hit 91%.

Newly appointed Central Bank Governor Hafize Gaye Erkan officially takes office in Ankara, Turkiye on June 9, 2023.
Newly appointed Central Bank Governor Hafize Gaye Erkan officially takes office in Ankara, Turkiye on June 9, 2023. Photograph: Anadolu Agency/Getty Images

UK grocery price inflation slows to 6.7%, data shows

Grocery price inflation in the UK slowed to an annual rate of 6.7% in December, while retailers enjoyed their busiest Christmas since 2019, according to the data firm Kantar.

Inflation is now at its lowest level since April 2022, but many consumers are still feeling the pinch. Prices for sweets, eggs and frozen potato products rose fastest but prices fell for dairy items, including butter, milk and cream.

Fraser McKevitt, head of retail and consumer insight at Kantar, said:

The rate of inflation is coming down at the fastest pace we have ever recorded, but consumers are still facing pretty hefty pressures on their budgets. Retailers were clearly working hard during the festive period to offer best value and win over shoppers, and promotions were central to their strategy. Nearly one third of all spend in the four weeks to Christmas Eve was made on items with some kind of offer, the highest level since December 2020 and £823 million more than last year.”

Britons made 488m trips to the supermarkets over the four weeks to 24 December, 12m more than a year earlier, and the largest number at Christmas since pre-pandemic times. A record £13.7bn passed through the tills last month, with the average household spending an all-time high of £477.

The discount chains Aldi and Lidl hit their highest ever market shares for the festive period while Britain’s two biggest supermarkets, Tesco and Sainsbury’s, were also among Christmas winners.

Lidl’s sales grew 13.8% year-on-year in the 12 weeks to 24 December and Aldis were up 9.9% taking their combined market share to 17%. Sainsbury’s sales rose 9.3% while Tesco’s sales were up 7.5%.

Shoppers spent £13.7bn on groceries in the run-up to Christmas – 7% more than a year before – as they sought out bargains and switched to discounters to try to offset price inflation.

Fraser McKevitt explained:

As we expected, this Christmas was a whopper. Friday 22 December turned out to be the most popular shopping day, when just over 25m trips were made and consumers spent £803m in physical stores – that’s 85% more than the average Friday in 2023. Online’s share of the market held steady at 11.6%, as nearly one in five households got a delivery in for the big day.

Santa’s sleigh and reindeer parking space is painted on the roof of Aldi, in Knutsford.
Santa’s sleigh and reindeer parking space is painted on the roof of Aldi, in Knutsford. Photograph: Molly Darlington/Reuters

Introduction: Red Sea attacks could lead to price rises, say UK retail bosses; FTSE 100 index turns 40

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK retail bosses have warned that the Houthi rebel attacks on commercial vessels in the Red Sea are delaying shipments, which will affect product availability and could push up prices in the UK. Maersk and other large shipping firms have diverted vessels away; they are now taking a much longer rote around Africa’s Cape of Good Hope and up the west side of Africa.

The British Retail Consortium warned this could have knock-on effects on product availability and prices. Chief executive Helen Dickinson said this was “as a result of higher transportation and shipping insurance costs”. She added:

Over the coming months, some goods will take longer to be shipped.

Leeds-based Boxer Gifts designs games and seasonal presents, which are made in China and then shipped to Europe via the Red Sea, one of the world’s busiest shipping lanes. Thomas O’Brien, boss of the family-run business, told the BBC that some of its costs had gone up by 250% over the last fortnight.

We just about got used to shipments arriving on time after Covid, but at the moment with the Red Sea, that’s adding another 10 to 14 days to shipments.

You end up with a two or three week delay. We’ve got Valentine’s Day products that are likely to be delayed and miss Valentine’s Day.

The same effect is going to be felt on Mother’s Day meaning a huge chunk of our selling time for these games is missed.

Oil prices are steady this morning, with Brent crude trading at $75.88 a barrel while US light crude is at $70.3 a barrel.

Marine Stewardship Council (MSC) and Maersk have halted sailings through the Red Sea until further notice, while France’s CMA-CGM is increasing shipments between Europe and the Mediterranean.

On a more positive note, the FTSE 100 turns 40 today. It started the year with a 0.15% drop yesterday. Our financial editor Nils Pratley has looked at its ups and downs over the last four decades.

On the first trading day of the new year, many stock markets fell back yesterday after notching up gains in recent weeks. Traders have reassessed the outlook for interest rate cuts: markets had been pricing in as much as 160 basis points of cuts in the US for 2024, twice as much as the Federal Reserve projects, but are now pricing in less than 150bps.

Expectations of a Fed rate cut by March have fallen back to an 85% probability and similarly at the European Central Bank the chance of a cut by March is now seen at 59%, down from 71% last Thursday, as analysts at Deutsche Bank noted. The minutes of the Fed’s last meeting, out later today, should shed more light on the central bank’s thinking.

On Wall Street, the S&P 500 closed down 0.6% yesterday, while the Nasdaq saw a larger, 1.6% decline. Stocks in Asia declined overnight, with Japan’s Nikkei slipping 0.2% while Hong Kong’s Hang Seng fell 0.9%, the Australian market dropped 1.4% and the South Korean market shed 2.3%.

In 2023, global financial markets confounded gloomy expectations when stocks rallied and bonds reversed heavy losses made early in the year. Many major share indices posted double-digit gains as falling inflation raised hopes of interest rate cuts next year, while recession fears faded at least for the US. Britain’s FTSE 100 lagged though, and gained less than 4% last year.

The Agenda

  • 8.55am GMT: Germany unemployment for December (forecast: 5.9%)

  • 3pm GMT: US ISM Manufacturing PMI for December (forecast: 47.1)

  • 7pm GMT: US Federal Reserve Open Market Committee minutes of last meeting



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