As grocery inflation approaches a 14-year high, the average UK food bill rises by £454 per year.
Prices for butter, milk, and pet food are rising at the fastest rates as consumers face rising living costs.
In August, supermarket inflation is expected to reach the highest level since at least 2008, after reaching nearly 10% this month amid the worst squeeze on household budgets on record.
According to Kantar, families are facing a £454 increase in average annual grocery bills, adding pressure amid the cost of living crisis, with butter, milk, and pet food among the biggest risers over the past year.
Wider consumer price inflation (CPI) for June is expected on Wednesday to hit 9.3%, up from 9.1% in May, underlining the impact of Britain’s cost of living crisis on households and businesses.
Consumer confidence surveys have hit record lows in recent months and businesses have reported steeply rising costs, especially from imported raw materials and higher wages.
Analysts predicted that rising food, gasoline, and energy prices would continue, as the war in Ukraine and economic sanctions against Russia stifled exports from both countries, pushing the UK into recession in the second half of the year.
Workers’ pay increased by only 4.3 percent without bonuses in May, trailing the CPI by 3.7 percent.
The Bank of England is expected to raise interest rates for the fifth time this year when policymakers meet next month, raising borrowing costs.
The Bank has warned that it must slow consumer spending to bring down inflation, though many analysts believe the combined impact of rising prices and higher borrowing costs is likely to have a bigger impact and push the UK into a recession.
Kantar said grocery inflation of 9.9% in the four weeks to 10 July and soaring sales of ice-cream and sun lotion – up 14% and 66% respectively – underpinned the first rise in overall grocery sales since April last year.
An additional 1.4 million households visited at least one of the discounters in the latest three months compared with last year as shoppers sought ways to cut their food bills amid rising prices.
Among the big four supermarkets, only Tesco increased sales, with Morrisons close to being overtaken by Aldi as the UK’s fourth-largest chain. Aldi controls 9.1% of the market against Morrisons’ 9.4% as the larger chains’ sales fell by 6.7%.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Grocery prices continue to soar to near record-breaking heights and have jumped by another 1.6 percentage points since last month. This is the second-highest level of grocery inflation that we’ve seen since we started tracking prices in this way in 2008 and we’re likely to surpass the previous high come August.
“All this means that people will be feeling the pinch during our first restriction-free summer since 2019. Taking a barbecue as an example, buying burgers, halloumi and coleslaw for some alfresco dining would cost you 13%, 17% and 14% more than it would have this time last year.”
He said buying enough for a typical family barbecue would cost £9.94, just over 10% more than last year.
Meanwhile a survey by the consultancy firm Deloitte found that a majority of finance directors believe a recession is imminent, amid rising costs eating into consumer demand and worker shortages caused by the pandemic, while the UK’s exit from the EU hits their ability to meet orders.
According to the survey, finance directors believe there is a 63 percent chance of a recession within the next year. More than two-thirds (68%) predicted that high inflation would continue into next year and would remain above the Bank’s 2% target in two years.
According to Ian Stewart, chief economist at Deloitte, companies are stockpiling cash reserves in preparation for a more difficult period ahead.