Rising food prices a key shopper concern
The cost of living was the number one macroeconomic concern among shoppers surveyed by IGD ShopperVista with 79% saying they were fairly or very concerned (October 2017).
When asked about their top personal economic concern, food prices came out on top, cited by 64% of shoppers (January 2018). Three quarters of shoppers were expecting food and grocery prices to rise in the next year (February 2018).
Inflation may play a role in this fear. As goods become more expensive to import, prices in the UK have been rising. The UK imports around half of its food, so food price rises are an unsurprising side effect of a weakening pound. Certain foods have experienced more price inflation than others. Notably, in the 12 weeks to 28 Jan 18 primary fish, lamb, pork and beef were between 2 and 7% more expensive, while poultry was 2.6% cheaper (Kantar Worldpanel, Category Tracking Gold).
Tighter budgets could mean more savvy shopping. According to Mintel only 16% of shoppers buying unprocessed meat/poultry/game would not make changes to their meat purchasing if they had less money to spend on groceries with 24% saying they would switch to cheaper types of meat e.g. from beef to pork. Cuts perceived as expensive are therefore likely to lose ground if wallets are further squeezed.
Those surveyed by AHDB/YouGov’s tracker perceived products such as sausages/bacon, whole chicken, and pork mince as cheap while beef steak, roasting joints, fish and lamb chops were perceived as expensive. Encouraging savvy shoppers with deals and a different mix of cuts could help to retain shoppers in the meat category.
Light at the end of the tunnel?
Chancellor Philip Hammond announced in his speech on 13 March that the UK economy had reached a turning point and there is light at the end of the tunnel, with growth to be slightly higher than expected in 2018. Inflation has also slowed this quarter with the latest figures showing a drop to 2.7%. The Bank of England expects real wages to begin growing again in 2018, which should mean more money in the pockets of shoppers but will hit profits in the food sector and may lead to more food price inflation.
Zoe Avison, Trainee Analyst
Zoe.Avison@ahdb.org.uk, 024 7647 8811