UK food price inflation hits 3.7%, highest level since March | Supermarkets

Food price inflation rose to 3.7% last month, the highest level since March, helping to kick off a supermarket season.

Sales at the major grocery chains rose 2.1% over the four weeks to December 29 compared with a year earlier, according to analysts Kantar. However, this increase was flattered by growth in food prices, which rose more than a percentage point from 2.6% in November.

Inflation has been rising gradually since July but took a big step up last month led by confectionery, skincare and juice, taking household spending on festive groceries to a record high of £460 on average.

Kantar also looked at trading in the three months to the end of December. Market leader Tesco increased grocery takeaway sales by 5% during this period, taking its market share to more than 28%.

Britain’s number two Sainsbury’s increased sales by 3.5%, while discounter Lidl rose 6.6% and Marks & Spencer 8.7%, all benefiting from a collapse in sales at Asda – which fell 5.8% – the only decliner among the major merchants.

The disappointing performance from the privately-owned chain indicates the scale of the challenge for new chair Allan Leighton, who has been tasked with turning around Asda’s performance. The retailer is struggling to tackle IT problems and fierce price competition under the weight of huge debt taken on to fund a £6.8bn acquisition. in 2020.

Fraser McKevitt, head of retail and consumer insights at Kantar, said: “It was a solid Christmas in the supermarkets, with sales exceeding £13bn over the four weeks of December for the first time ever, showing that people were clearly in the mood to celebrate and spend.

“People were also willing to splash out that little bit more than usual, as branded sales growth accelerated to 4.2%, while premium own brands rose 14.6%.”

Sparkling wine and champagne sales rose 4.4% to a total of £187m in December. There was also moderate enjoyment as 11% of the population bought a non-alcoholic drink, compared to less than 10% last year.

McKevitt added that more people had chosen to do at least some of their grocery shopping online this Christmas; online spending for December hit record £1.6bn

However, analysts at NeilsenIQ said the online share of the market had fallen to 11.9% in December from 12.5% ​​a year earlier, as shoppers sought savings in bricks and mortar stores, where visits were up 8% – a significant difference compared to the trend in non-food shopping.