AS retail price inflation for groceries continues to drop sharply away, August has witnessed one of its most significant monthly falls for at least 15 years.
Market research company Kantar reports that grocery price inflation fell by 2.2 percentage points to 12.7% in the four weeks to 6 August 2023, compared with the same four weeks in 2022.
This was the second biggest monthly fall since the company began monitoring grocery inflation in 2008.
According to Kantar, the food inflation element of the current cost of living crisis peaked back in March at 17.5% year-on-year (4 weeks to 19 March 2023).
Some prices have already started to edge downwards since they peaked earlier in the year, such as milk and sunflower oil, says the report.
Assuming prices stop rising, the year-on-year inflation figure can be expected to decrease every month until next March, when it could come back to zero.
If retail food prices start falling significantly, then theoretically, grocery inflation could become negative as we move into 2024.
For now, food prices remain almost 20% higher than before the cost of living crisis began.
Kantar calculates that by last month, households would have spent £683 more on their annual grocery bill to buy the same items as they had a year previously.
In reality, the report says that consumers have adapted their habits to limit this increase.
“It’s clear that shoppers have dramatically changed their behaviour to combat inflation, whether by trading down to cheaper products or visiting different grocers.
“The average annual increase to household spending over the past 12 months has actually been £330 – well below the hypothetical £683.”
So, turning back to the August figure, although inflation stood at 12.7% last month, as stated above, overall take-home grocery sales increased by just 6.5% over the same period.
“Own-label goods remained popular in the latest four-week period, with sales up by 9.7%, and own-label sales continue to outpace branded, although the gap between the two is closing,” the report says.
“Buying supermarket lines is just one of the ways people have been trying to save money at the tills, and we can see the impact on how much they are spending.
“The average increase in households’ weekly grocery shop is £5.13 compared with last year, well below the £11.27 extra they would have paid if consumers had bought exactly the same items as 12 months ago, based on the current rate of inflation.”