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First Quarter Of 2017 Sees A Sharp Rise In UK Food Prices Caused By A Weakened Pound

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Following Brexit vote, the weakened pound as well as supermarkets moving to ditch promotions, have added an average £21.31 to quarterly food bills

An increase in the average household shopping bill:

According to new grocery market data, over the past three months, the number of promotions fell to an 11-year low, which added £21.31 to the average household shopping bill.

Kantar Worldpanel said that in the three months to 26 March from a year ago, the price of everyday goods at supermarkets rose 2.3% which is a big increase compared to the 0.2% food price inflation recorded in the 12 weeks to 1 January which was the first time prices rose in more than two years.

Kantar added though that the increase in everyday staples such as butter, fish, tea and skincare have been somewhat balanced by the decrease in crisps, bacon, chocolate and fresh poultry.

Head of retail and consumer insight at Kantar, Fraser McKevitt, said: “We expect inflation to continue to accelerate, and as a result we’re likely to see consumers looking for cheaper alternatives. A reduction in promotional activity means the proportion of spending on promotions now stands at just 32.9% – 5.5 percentage points lower than last year.”

Multi-buy deals and other special offers are being cut by supermarkets following evidence that they confuse customers and cause the increase of food waste. The proportion of consumer spending on promotions at UK supermarkets has fallen to an 11-year low, according to separate data from Nielsen.

Phasing out promotions:

In the four weeks to 25 March, only 26% of money spent at supermarkets went on products with temporary price cuts or multibuy offers, which is the lowest since 2006.

Nielsen’s UK head of retailer and business insight, Mike Watkins, said “The level of promotional spend has gone back to levels not seen since before the 2008-09 economic crisis. The last few years have seen about a third of the typical supermarket shopping bill going on promotional items. However, to be more price competitive, supermarkets have turned temporary price reductions into permanent cuts, so there’s less promotional activity as many prices are cheaper all-year round.”

Sainsbury’s was the first major supermarkets last year to shelf the controversial “buy 1, get 1 free” and offer lower everyday prices instead.

However, the price of imported goods has increased after the Brexit vote which caused a sharp decrease in the pound. Supermarkets have been passing on the increases to customers.

In the past three months, supermarket sales of “free from” products grew by 36% year on year because 54% are buying gluten or dairy-free products, according to Kantar.