World News

British shoppers face a staggering £788 rise in grocery bills

Grocery price inflation hits a record 16.7% high leaving cash-strapped families facing an extra £788 on their annual food shopping bill

  • Food prices have leapt a ‘staggering’ 2.3 percentage points in just four weeks 
  • Analysts now fear year-on-year grocery bills will soar by almost £800 in 2023 
  • It comes amid warnings the UK will be the only G7 economy to slip backwards 

Cash-strapped families are facing the sharpest increase in grocery prices since records began, with annual shopping bills predicted to rocket by £788 this year.

Grocery prices ballooned by a record 16.7 per cent year-on-year, in the largest hike since analyst Kantar started monitoring food inflation in 2008. 

The gloomy news came as financial experts warned there had been a ‘staggering’ 2.3 percentage point jump in the four weeks to January 22.  

It marked a steep increase on the 14.4 per cent seen in December, when festive discounts in the run-up to Christmas helped limit runaway price booms. 

Shoppers are facing an extra £788 on their grocery bills as food inflation prices continue to rocket (stock image)

A number of supermarkets reported strong sales over Christmas amid record high food price inflation. But the consumer watchdog said shoppers believe stores should do more to help customers survive the cost of living crisis

Fraser McKevitt, head of retail and consumer insight at Kantar, said: ‘Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived. 

‘Households will now face an extra £788 on their annual shopping bills if they don’t change their behaviour to cut costs.’

The revelation comes despite retail bosses insisting they were taking a tougher approach with suppliers in a bid to drive down prices for customers. 

But industry insiders have slammed supermarkets and accused them of fuelling the cost-of-living crisis by pushing through unfair price hikes.

The row comes after Tesco’s chairman John Allan sparked fury with allegations that some suppliers are to blame for demanding unjustified price increases for groceries.

Mr Allan told the BBC it was ‘entirely possible’ food producers were taking advantage of customers. 

He said the UK’s biggest supermarket chain had ‘fallen out with suppliers’ over prices and is trying ‘very hard to challenge cost increases’.

Shoppers have already started changing supermarkets in their droves as soaring food prices take their toll on households, a study has revealed.  

Research found the number of people shopping in Marks & Spencer before the cost-of-living crisis stood at 47 per cent, but had fallen to 21 per cent in December 2022.

Waitrose saw its customers fall by half, from 33 per cent to 14 per cent, as did online supermarket Ocado which dipped from eight to four per cent.  

Revealed: 18% of shoppers said they had stopped buying from Waitrose since the cost-of-living crisis while 10% said they had switched away from Sainsbury’s. Meanwhile, Aldi, Iceland, Tesco and Asda all saw their customer numbers grow, according to data by Paragon Bank

John Allan, Tesco’s boss, said it was ‘entirely possible’ food makers were putting up prices to take advantage

Tesco insist it was trying to combat rises in prices from suppliers to help save customers cash (stock image) 

Revealed: More shoppers said they used discount supermarkets since the cost-of-living crisis compared with before

CLICK HERE: Tesco chief issues warning over food rip-offs amid fears companies could be using inflation to hide price rises 


But Ged Futter, a former buyer for Asda, argued that supermarkets decide the prices on shelves and suggested they are to blame for pushing through unfair hikes to protect their multi-billion pound profits.

Mr Futter, now a retail analyst, described the comments from Mr Allan as ‘outrageous’.

He said: ‘Some suppliers are profiteering but, at the same time, we also know that some retailers are putting up their prices higher than the inflation they are receiving. I would say it is quite disingenuous to be talking about suppliers profiteering.

‘He [Mr Allan] also seems to forget that the price on shelves is the responsibility of the retailer, not the supplier.

‘The supplier is responsible for looking after their costs to make sure they survive. After that however much (the price) goes up it is the retailer.’

He pointed out that Tesco is on course to unveil big profits for the past year.

‘They are looking at £2.5 billion. They have got about five weeks to their year end and all their buyers will be focussing on hitting that number. The profitability of retailers is under pressure but not to the level where they are worried,’ he said.

Other supermarket giants such as Morrisons said they are taking a more ‘robust’ approach in their discussions with suppliers. 

Ged Futter, a former buyer for Asda, argued that supermarkets decide the prices on shelves and suggested they are to blame for pushing through unfair hikes to protect their multi-billion pound profits

Despite price rises, consumers appear to have maintained New Year’s resolutions and a commitment to Dry January, with sales volumes of no and low alcohol beer up three per cent on last year.

Overall take-home grocery sales rose by 5.7 per cent during the four-week period and by 7.6 per cent over the quarter. 

Aldi was the fastest-growing grocer for the fourth month in a row, with sales up 26.9 per cent year on year and now holding 9.2 per cent of the market. Lidl’s sales jumped by 24.1 per cent to give it a 7.1 per cent market share.

Among the three largest grocers, Sainsbury’s sales increased by 6.1 per cent, just 0.1 percentage points higher than Asda and Tesco, to give it 15.4 per cent of the market.

Tesco remains the largest British retailer with a 27.5 per cent market share while Asda holds 14.2 per cent.

The news comes as Britain was faces becoming the only G7 economy slipping into recession this year – amid predictions that even Russia will fare better.  

The IMF is now forecasting that the UK’s GDP will contract by 0.6 per cent in 2023 – it was previously expected to grow by 0.3 per cent 

The IMF forecasts that GDP will shrink 0.6 per cent in 2023 – much worse than the 0.3 per cent growth it had previously pencilled in.

No other member of the group of developed economies is expected to go into the red – with even sanctions-hit Russia set to record 0.3 per cent surge.

Chancellor Jeremy Hunt and ministers swiped that the grim forecasts had been wrong before. The UK is thought to have had the fastest growth in the G7 last year at 4.1 per cent, following the miserable Covid slump.

However, Mr Hunt is having to fend off gathering Tory demands for tax cuts and a growth plan to get the economy back on its feet.

Chief economist for the IMF, Pierre-Olivier Gourinchas said there were three primary factors behind the UK’s gloomy outlook. 

Chancellor Jeremy Hunt has all but ruled out tax cuts in his March Budget, insisting last week he was ‘unlikely to have any headroom’

He said: ‘First, there is exposure to natural gas… we’ve had a very sharp increase in energy prices in the UK. There is a larger share of energy that is coming from natural gas, with a higher pass-through to final consumers.

READ MORE: Pension reforms to keep over-50s in work are being considered as Jeremy Hunt examines the idea of raising the lifetime allowance to lure back early retirees


‘The UK’s employment levels have also not recovered to pre-pandemic levels. This is a situation where you have a very, very tight labour market but you have an economy that has not re-absorbed into employment as many people as it had before. That means there is less output, less production.

‘The third is that there is a very sharp monetary tightening because inflation has been very elevated, that’s a side effect of this high pass-through of energy prices.

‘Inflation was 9.1 per cent last year, and it’s expected to actually remain quite high in this coming year at 8.2 per cent (so) the Bank of England has started tightening.

‘The UK has a fairly high share of adjustable rate mortgages. So when the Bank of England starts increasing rates, it feeds into the mortgage rates that mortgage holders are paying, and that is also weighing down economic activity.’

Responding to the IMF report Mr Hunt said: ‘The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted.

‘However, these figures confirm we are not immune to the pressures hitting nearly all advanced economies. If we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years.’

In a round of interviews on Tuesday morning, transport minister Ric Holden said the IMF has been ‘wrong’ before and the UK will outperform its economic forecasts.

He told Times Radio: ‘They’ve been wrong in the last two years, the OECD were also wrong over the last two years. I think Britain can beat those predictions.’

Former Cabinet minister Jacob Rees-Mogg shrugged off the predictions, saying ‘when were the forecasts last right?’

He also had a dig at the Office for Budget Responsibility watchdog, saying its estimates were ‘less accurate than the Radio 4 racing tips’. 

Source: Read Full Article