Grocery Price Gains Have Yet to Change U.K. Shopper Behavior

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Grocery price increases in the U.K. aren’t yet denting shoppers’ festive spirit, according to data-tracking firm Kantar.

Christmas dinner staples are becoming pricier as grocery inflation reached 3.2% in the past month, the highest rate since June 2020. Still, Kantar said it has not noticed a shift in consumer habits yet, such as swapping branded products for own label or seeking out promotions.

“Price inflation doesn’t seem to be denting their desire to treat themselves and loved ones,” Fraser McKevitt, head of retail and consumer insight at Kantar, said in a statement. “Supermarket premium own-label ranges, such as Tesco Finest and Asda Extra Special, are the fastest-growing.”

Grocers have been prepping for Christmas amid a backdrop of wider supply-chain challenges and driver shortages in the U.K., with J Sainsbury Plc attempting to reassure customers that there will be “plenty of food,” or at least alternatives if some products are missing.

U.K. stores enjoyed brisk sales in November as consumers did their Christmas shopping early and took advantage of Black Friday discounts to buy winter clothing, according to other reports published Tuesday.

Total sales in stores and online were 4.1% higher than in the same month of 2019, the British Retail Consortium and KPMG said. Separate data from Barclaycard showed overall consumer spending jumped by 16%.

The findings reinforce a picture of buoyant consumer confidence, though both surveys highlighted the threat posed by the new omicron variant as the government comes under mounting pressure to impose fresh restrictions to contain the outbreak.

There was also a warning about inflation. Barclaycard found that almost nine in 10 consumers were worried about rising energy bills and other household expenses, while the British Retail Consortium said rising costs meant retailers had little room to repeat the big New Year price cuts seen in previous years.

“Rising inflation, which could top 4%-plus by the end of this year, is likely to prompt an interest-rate rise sooner rather than later, which could dent consumer confidence and spending,” said Paul Martin, head of retail at KPMG.

In November, people snapped up clothing and jewelery as they sought to avoid potential supply shortages, according to the BRC-KPMG report. Spending was also given a boost by discounted clothing as Black Friday offers extended beyond electronics and household appliances. 

Barclaycard said spending rose across essential and non-essential goods.

“The arrival of Christmas markets and lights across the U.K. brought some festive cheer to the retail, leisure and hospitality sector in November, while the return of darker nights and colder evenings saw Brits spending more on at-home pursuits such as takeaways and home entertainment,” said Jose Carvalho, head of consumer products at Barclaycard.

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