A record +1% leap in four weeks took total FMCG inflation to +7.7% to-date this year, leaving price conscious shoppers attempting to manage budgets.
New findings from big data, analytics and insights leader, IRI, show that the four weeks from 4 June – 2 July 2022 saw the highest leap in prices across the UK’s largest FMCG retailers since the start of this year. A +1% increase in that window took the total price increase for this year in major supermarkets – the source of over 80% of grocery sales – to +7.7%, and +9.6% in food and non-alcoholic drinks specifically.
Canned soup, beans, pasta and cooking oils are the categories that experienced the highest price increases in the four-week period. Within the major supermarkets, branded and private label goods have now become more expensive by +6.8% and +9.8% respectively in 2022.
IRI’s granular analysis also highlights a corresponding move to cheaper items as shoppers look to manage budgets: decisions to buy cheaper products have helped shoppers to mitigate price increases by -4.3%.
Supermarket value tiers have lost the most unit sales, with an -11.2% decline in the four weeks. This finding suggests a move to discount retailers among shoppers, as well as the removal of items from baskets to manage tighter budgets. At the same time, a K-shaped recovery continues to play out in stores, as the more premium products enjoy sales growth, increasing unit sales by +2.2% in IRI’s latest data.
Explaining why June saw this record leap was Daniel Wright, Senior Strategic Insight Director at IRI: “As we saw at the beginning of the year, retailers are working to protect their customers from the increasing cost of living, but retail prices will inevitably rise. We’re now seeing the retailers that previously didn’t pass on price rises to customers in full put their prices up, plus the manufacturers that originally delayed input price rises for retailers are now having to do the same. For some manufacturers, they’re now on their 2nd or 3rd price increase conversation since Christmas. These are extraordinary times.
“The index gap in the producer price index is the widest it’s been for over a decade at 20.5 points. This ultimately means that the cost to produce products is increasing faster than the factory gate price, which is in no way sustainable.”