Consumer purchasing power in the grocery sector has fallen approximately 9-10% since 2019, according to a recent study by TradingPedia.
The study found the total price of groceries rose 22.6% between August 2019 and August 2022, against a climb of 13.5% from £538 to £611 in the average weekly earnings of all UK employees between June 2019 and June 2022.
According to researcher Brian McColl, a basket of 55 items purchased from Tesco would have cost £109.89 in August 2019. However, the same basket of items currently amounts to £134.76 at checkout.
Food items including Tesco Finest white loaf rose 36.3% in price from 99p to £1.35, while chicken breast portions increased 10.5% from £3.80 to £4.20 and Tesco British unsalted butter climbed 16.6% from £1.50 to £1.75.
The price tag on branded items soared, with Hellmann’s mayonnaise spiking 70% from £20 to £3.40, Clover lighter spread rising 140% from £1 to £2.40 and Doritos tortilla chips more than doubling in cost with a 102% surge from 99p to £2.
Analysts at Citigroup currently estimate food price inflation will peak at approximately 20% in Q1 2023, while producer price inflation will keep accelerating.
Recent reports by the Institute of Grocery Distribution estimate a 15% peak in food inflation in summer 2022, with grocery costs expected to remain high heading into 2023.
“Food price inflation is very likely to mount greater upward pressure on wage demands compared to other types of inflation. And that is quite a concern for Bank of England policy makers, because considerable wage increases may also drive overall inflation,” said TradingPedia analyst Michael Fisher.
“Still, on a more positive note, Bank of England expects inflation to begin moderating in H1 of 2023 and ultimately return to its inflation target at some point during the second half of 2024”