Introduction: Grocery inflation hit 13-year high
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
UK consumers are facing the steepest increase in food bills in 13 years, as the cost of living crisis hits households.
Grocery price inflation jumped to 8.3% over the four weeks to June 12 – up from 7% a month earlier and its highest level since April 2009, new figures from data firm Kantar show.
This means annual grocery bills will jump by £380 this year, adding to the burden on people who also face surging energy bills and record price for petrol and diesel at the pumps.
Fraser McKevitt, head of retail and consumer insight at Kantar, says food bills are rising sharply:
“This is over 100 pounds more than the number we reported in April this year, showing just how sharp price increases have been recently and the impact inflation is having on the sector,”
With food prices jumping, shoppers are increasingly swapping branded items for cheaper own-label products.
Kantar reports that sales of branded products fell by 1% in the 12 weeks to June 12, while own-label sales rose by 2.9% and value own-label lines jumped by 12%.
McKevitt said sales of own-label lines have been “boosted by Aldi and Lidl’s strong performances, both of whom have extensive own-label repertoires”, adding:
“We can also see consumers turning to value ranges, such as Asda Smart Price, Co-op Honest Value and Sainsbury’s Imperfectly Tasty, to save money.”
We reported last month that the UK’s “golden era” of cheap food was over, and Kantar’s figures confirm that the squeeze on households is getting worse.
Also coming up today
Britain’s biggest nationwide rail strike for 30 years has begun, leaving train passengers facing widespread disruption and cancellations as workers responsible for train lines and infrastructure across the UK walked out.
Industry leaders fear the economic disruption will be considerable, as travellers and commuters decide to stay at home, with strikes also planned for Thursday and Saturday.
Last-ditch talks yesterday failed to resolve the bitter dispute over pay, jobs and conditions, with all sides blaming each other for the lack of progress.
The RMT said train operating companies made a late pay offer yesterday, believed to be about 2-3%, with strings attached and no guarantees against compulsory redundancies. That’s a long way below inflation, which hit 9% in April.
Richard Burge, chief executive of the London Chamber of Commerce and Industry, warned that the capital “cannot afford a summer of chaos on the railways and tube lines”, given the slowing economy.
“While this strike will be damaging, a recession is looking likely regardless; as such, I wouldn’t pin an eventual recession on this strike.”
The agenda
- 8am BST: Kantar’s report on UK grocery sector
- 11am BST: CBI industrial trends survey of UK factories in May
- 1.30pm BST: Chicago Fed National Activity Index
- 3pm BST: US existing home sales for May
Hospitality industry expected to lose £500m of revenue from strikes
Geneva Abdul
Today’s UK rail strikes are going to cost the hospitality industry’s restaurants, pubs and other businesses £500m in revenue, the CEO of UKHospitality said.
Speaking on BBC Radio 4’s Today programme, Kate Nicholls said with businesses shutting early, or not opening in response to the rail strikes, hospitality employees also won’t be able to work.
This strike will also not only have an impact this week, it will hit consumer confidence going forward. And as a result of the pandemic, one in three of our businesses have no cash reserves, one in five have still not returned to making a profit.
So they are incredibly fragile and they cannot withstand anymore of these severe economic shocks.
My colleague Geneva Abdul is live-blogging today’s industrial action on the transport network, here:
Rolls-Royce offers workers £2,000 to help ease cost of living crisis
The UK’s escalating cost-of-living squeeze has prompted engineering group Rolls-Royce to offer a £2,000 payment to around 14,000 UK staff.
The aircraft engineering group told staff on Monday that it would give the cash lump sum to 11,000 shop-floor workers as well as 3,000 junior managers.
The shop-floor workers are also being offered a 4% pay rise for 2022, backdated to March.
A Rolls-Royce spokesperson said the company was offering the majority of its staff a cash lump sum of £2,000 “to help them through the current exceptional economic climate”.
He said it was the first time the company has paid out a cash lump sum that is not linked to performance, but to the economic climate, adding:
“In addition, we are offering our shopfloor staff the highest annual pay rise for at least a decade, back-dated to March, and together these measures represent around a 9% pay increase for them.”
Despite rising food bills, Britons did splash out on the Queen’s Platinum Jubilee celebrations.
Sales during the week of the Platinum Jubilee (which included two bank holidays) were £87m higher than in an average week, with an increase in alcohol and and ice cream.
Market leader Tesco and Aldi and Lidl were the only groups to increase their market share on a sales value basis over the 12 weeks.
Only the discounters increased sales, Kantar reports, as customers tried to make their money stretch further.
Supermarket sales fell by 1.9% during the 12 weeks to June 12 year-on-year, but were up 0.4% in the last four weeks.
Introduction: Grocery inflation hit 13-year high
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
UK consumers are facing the steepest increase in food bills in 13 years, as the cost of living crisis hits households.
Grocery price inflation jumped to 8.3% over the four weeks to June 12 – up from 7% a month earlier and its highest level since April 2009, new figures from data firm Kantar show.
This means annual grocery bills will jump by £380 this year, adding to the burden on people who also face surging energy bills and record price for petrol and diesel at the pumps.
Fraser McKevitt, head of retail and consumer insight at Kantar, says food bills are rising sharply:
“This is over 100 pounds more than the number we reported in April this year, showing just how sharp price increases have been recently and the impact inflation is having on the sector,”
With food prices jumping, shoppers are increasingly swapping branded items for cheaper own-label products.
Kantar reports that sales of branded products fell by 1% in the 12 weeks to June 12, while own-label sales rose by 2.9% and value own-label lines jumped by 12%.
McKevitt said sales of own-label lines have been “boosted by Aldi and Lidl’s strong performances, both of whom have extensive own-label repertoires”, adding:
“We can also see consumers turning to value ranges, such as Asda Smart Price, Co-op Honest Value and Sainsbury’s Imperfectly Tasty, to save money.”
We reported last month that the UK’s “golden era” of cheap food was over, and Kantar’s figures confirm that the squeeze on households is getting worse.
Also coming up today
Britain’s biggest nationwide rail strike for 30 years has begun, leaving train passengers facing widespread disruption and cancellations as workers responsible for train lines and infrastructure across the UK walked out.
Industry leaders fear the economic disruption will be considerable, as travellers and commuters decide to stay at home, with strikes also planned for Thursday and Saturday.
Last-ditch talks yesterday failed to resolve the bitter dispute over pay, jobs and conditions, with all sides blaming each other for the lack of progress.
The RMT said train operating companies made a late pay offer yesterday, believed to be about 2-3%, with strings attached and no guarantees against compulsory redundancies. That’s a long way below inflation, which hit 9% in April.
Richard Burge, chief executive of the London Chamber of Commerce and Industry, warned that the capital “cannot afford a summer of chaos on the railways and tube lines”, given the slowing economy.
“While this strike will be damaging, a recession is looking likely regardless; as such, I wouldn’t pin an eventual recession on this strike.”
The agenda
- 8am BST: Kantar’s report on UK grocery sector
- 11am BST: CBI industrial trends survey of UK factories in May
- 1.30pm BST: Chicago Fed National Activity Index
- 3pm BST: US existing home sales for May
