The average consumer in the United Kingdom is likely feeling the pinch when purchasing essential day-to-day items in the supermarket. During a recent survey, a large share of respondents stated that their
over the last month. This figure peaked at 91 percent in August 2022 and was recently recorded at 52 percent in January 2024. Despite this decrease, just over half of the survey population still reported cost increases. Food is one of the hardest-hit categories during this period of
. Prices of
increased by a record high of 19.1 percent in March 2023 when compared to 2022. Most recently, this figure has dropped to eight percent, yet food prices are still rising albeit at a slower pace.
Why are prices rising?
The Russian invasion of Ukraine is one of the factors that kicked off the increasing price of everyday essentials in the UK. Together,
Russia and Ukraine accounted for 53 percent of the global trade of sunflower oil and seeds and 27 percent of the global wheat trade in 2020. Exports have been hampered since the beginning of the conflict, pushing up the prices of sunflower oil and wheat-based products.
Increased energy prices across Europe have also pushed up costs for food producers and retailers. These price increases are then passed onto the consumer at the supermarket checkout. However, in May 2023, energy prices fell for the first time since early 2021. Despite this, it may still take some time for this disinflation to make a difference in food shoppers’ wallets. Other factors behind increasing prices include bad weather affecting crop outputs, increasing labor costs, and post-Brexit trade barriers.
How are consumers reacting?
When surveyed in November 2023, almost 39 percent of surveyed respondents in the UK were
worried about affording food. This figure peaked at 44.4 percent in February 2023. Choosing to make meals out of food that is already in the cupboard and dedicating more time to planning grocery shopping were some of the
top ways in which consumers were cutting food shopping costs in 2023. A large share of surveyed consumers were also
eating out less. The sales growth of different kinds of supermarket products also clearly points to a drastic change in consumer behavior. In the 16 weeks ending on April 16, 2023, the
sales value of own-label, otherwise known as private label, products grew by almost 50 percent in UK supermarkets.
The knock-on effect: Discount supermarket boom
The supermarket landscape in the United Kingdom was traditionally dominated by the big four players: Tesco, Sainsbury’s, Asda, and Morrisons. In September 2022, discount supermarket chain
Aldi took over fourth place for the first time, signaling a shift in consumer preferences. In 2023, Aldi's market share hit double digits for the first time. Lidl and Aldi offered the
lowest price for an average shopping basket in the UK in 2023, clearly making them a popular option for the thrifty food shopper. It is yet to be seen if Aldi and Lidl can continue to climb the supermarket ranks in the UK as the food inflation rate slows. If they are successful and continue to attract more and more UK shoppers, the
share of new grocery stores opened by discount retail brands may continue to rise from an already impressive 74 percent in 2023.
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