Threat of higher grocery prices looms as British supermarket inflation hits record of 11.6%

Supermarket inflation has reached its highest peak since 2008
Threat of higher grocery prices looms as British supermarket inflation hits record of 11.6%

As Irish supermarkets rely heavily on imports from British suppliers, Ireland's retailers are exposed to potential consequences from that inflated market.  Picture: Getty

The threat of even higher grocery and food prices in Ireland looms large, as British supermarket price inflation reached a new peak of 11.6% in the last few weeks.

Leading market research firm Kantar said that grocery price inflation in Britain hit its highest level since 2008 of 11.6% over the past four weeks, which means a household there will pay an extra £533 (€633) a year for their groceries.

“As predicted, we’ve now hit a new peak in grocery price inflation, with products like butter, milk, and poultry in particular seeing some of the biggest jumps," said Fraser McKevitt, head of retail at Kantar, referring to British supermarket prices. 

This rise means that the average annual shop is set to increase by a staggering £533, or £10.25 every week, if consumers buy the same products as they did last year.

Kantar's latest survey for supermarkets in Ireland will be published next week. Its survey in July showed Irish grocery price inflation was then running at 7.7%. 

Ireland is particularly exposed to hikes in British food and grocery items, because supermarkets this side of the Irish Sea import huge amounts of grocery items from British suppliers and manufacturers such as Unilever.

Prices here can also be tempered, however, by how well the euro is trading against sterling, because a strong euro can offset some, but not all, the hikes in grocery imports from Britain. The euro has been trading in a range of between 85.5 pence and 84.5 pence against sterling in recent weeks.                                            

The British survey shows that shoppers there are buying more own-label groceries, as well as making more trips to the shops.

“People are shopping around between the retailers to find the best value products, but back in 2008 there was much more of a reliance on promotions," Mr McKevitt said. 

However, he said that hunting out promotions this year is more difficult as British "supermarkets are currently pointing shoppers towards their everyday low prices, value-ranges, and price matches instead". 

Sales of British supermarket own-label products soared by almost 20% in August, according to Kantar.

In Britain, Lidl and Aldi increased their sales in recent weeks faster than their supermarket rivals, the latest survey found.

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