U.K. Grocers Back in Growth as Brits Pay More for Their Shopping

(Bloomberg) -- U.K. supermarket operators posted their strongest growth in five years, as higher prices and hot weather combined to boost sales across the industry.

Sales growth accelerated to 5 percent in the 12 weeks ended June 18, with all of the country’s four main chains benefiting, researcher Kantar Worldpanel said in its monthly report. Food prices rose 3.2 percent as consumers bore some of the pain from rising commodity prices and the weak British pound.

“At this rate, that’s an extra 133 pounds ($169) on the average household’s annual shopping bill, or the equivalent of seven additional shopping trips a year,” Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said in the statement. Butter is almost 20 percent pricier than last year, while salmon prices are up 14 percent, the researcher said.

Sales growth at Tesco Plc showed the most significant sequential improvement, while growth at Wm Morrison Supermarkets Plc once again outpaced its large rivals.

The grocery market is proving a relative bright spot in the U.K. retail industry as a squeeze on disposable incomes and prevailing economic uncertainty forces consumers to rein in spending on non-essential goods. Department-store group Debenhams Plc said on Tuesday that full-year profit could fall short of some analyst estimates if volatile trading continues.

In addition to rising inflation, sales were also helped by a sustained period of hot early summer weather. A surge in demand for ice creams and cider added 58 million pounds to industry revenue in the period, Kantar said. The heatwave has continued in recent weeks, suggesting grocers may get a further boost.

Sales at discounters Aldi and Lidl rose by about 19 percent in the latest period, according to Kantar’s data. The two retailers combined now account for almost 12 percent of all grocery spending.

To contact the reporter on this story: Sam Chambers in London at schambers7@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Paul Jarvis, Thomas Mulier