Markets

Grocery inflation adds £15 to Britain’s Christmas bills

Shoppers in Britain had to pay more for their Christmas groceries amid a 3.5% jump in prices in December, according to fresh retail industry figures revealing a sharp rise in the cost of beef, savoury snacks and skincare in particular.

Grocery price inflation added nearly £15 to an average monthly bill over the festive period, according to analysts at Kantar. The monthly increase was the sharpest since January 2018, bar a short period in spring 2020 when retailers dropped promotions to keep products available amid panic buying at the onset of the coronavirus pandemic.

While the prices of some items – including fresh bacon, bath and shower products and spirits – have fallen in recent weeks, Kantar found grocery price inflation accelerated in December. It climbed by almost 1.5 percentage points in a month from the 2.1% level seen in November.

Consumers splashing out on Christmas treats pushed total grocery sales to £11.7bn in the four weeks to 26 December – just 0.2% below the record established at the end of 2020, when supermarket sales benefited while pubs and restaurants were closed due to Covid restrictions in some areas of the UK.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “People seized the chance to enjoy Christmas with friends and family after last year’s muted festivities. The data suggests that, while there weren’t formal rules in place across the UK this year, many people celebrated at home again due to Omicron.”

Despite the spread of the Omicron variant, shoppers returned in greater numbers to supermarkets to fill their festive trolleys, with the largest number of in-store visits in December since March 2020. In comparison, online sales fell by 3.7% compared with a year earlier, accounting for just over 12% of total sales.

The busiest shopping day of the year was 23 December – typically a bumper day for pre-Christmas spending. Analysts viewed this as evidence of shoppers’ confidence that supply chain disruption earlier in the year wouldn’t prevent them from being able to buy their turkey, brussels sprouts and Christmas pudding at the supermarket.

Tesco, Britain’s biggest supermarket chain, maintained dominance over its rivals during the crucial Christmas trading period, growing its market share to 27.9% over the 12 weeks to Boxing Day. This marks an increase of 0.6 percentage points from a year earlier.

Retailers found it challenging to beat the record for pre-Christmas sales set in 2020, when hospitality venues had to close and could only serve customers takeaway food and drink in some areas of the UK. However, every main grocer increased their sales compared with the final 12 weeks of 2019. Discounters Aldi and Lidl, as well as Waitrose, all made a slight improvement to their market share.

Online grocer Ocado, which has a joint venture with Marks & Spencer, was the only retailer which grew its sales compared with a year earlier.

Consumers splashed out on premium ranges, taking sales of supermarkets’ own-brand luxury products to record levels, as shoppers spent £627m in December alone – an increase of almost 7% for such items compared with 2020.

Traditional treats such as mince pies and chocolates proved popular, but sales of newer plant-based foods also grew before Veganuary, a period when consumers promise to only eat vegan food during the first month of the year.

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