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UK Grocery inflation falls to 12.7%

Journalist: Newspage Newsdesk

ended 15. August 2023

New data from Kantar Worldpanel has shown that UK grocery inflation dropped to 12.7% in the four weeks to 6 August, 2.2% lower than the previous month. UK news agency asked financial services experts what this could mean for the Bank of England's next interest rate decision, and whether it a good omen ahead of Wednesday's critical inflation print.

11 responses from the Newspage community

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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
The combination of falling grocery inflation and a rise in real income, as shown in today's wage data is good news for premium retailers. This is reflected in Marks & Spencer's share price, this morning. It's the best performing of all supermarkets. The wider data shows how adaptable the UK consumer is, with bargain food retailers seeing a massive market share increase when wages were squeezed most. Supermarkets will feel bullish following all of the data sets released today.

This should also signal a massive fall in UK inflation, with data released tomorrow. This should make it easer for the policy committee to find consensus on keeping rates on hold this time around.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
Seeing any inflation figures falling is to be celebrated, especially groceries which have been putting familes across the UK under pressure. However, at over 12% it is still high and with the large uplift in profits from the supermarkets, there is still obviously more that could be done to bring prices down further.
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Justin MoyVerified
Managing Director at EHF Mortgages
This reduction of around 2% in food inflation is one of the huge contributory influences to the overall inflation rate, so this is excellent news for the consumer - This was certainly a market prediction from a few weeks ago that has come true, so would have been already in the MPC's thoughts, and combined with an expectation of sub-7% inflation tomorrow, I don't see anything more than a further 0.25% on base rate. The trends are better but the figures are still relatively high and the MPC can only do one thing.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
Whilst good news, the figures remain at an unmanageable level in the long term. Interesting to note budget supermarkets have seen their sales rise by more than double the middle market retailers. This a sure sign that people are preferring to buy cheaper groceries as the effects of the cost of living bite. With the higher end of the market performing well, and the budget end, all eyes are on how the middle market will manoeuvre to protect and improve their market share.
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Darryl DhofferVerified
Founder at The Mortgage Geezer
No surprise of sales increases in for many large chain supermarkets - as long as the MPC understand the consumer isn't running around like an episode of "Supermarket Sweep" cramming the trollies and is sensitive to further rate increases. More like bare essential food and everyday items going into the basket, and it's supermarkets that are profiting from these essentials. Maybe the government can add some bite, and look at the overall pricing structure of these supermarkets to ensure fair pricing
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John ChoongVerified
Senior Equity Research Analyst at Investing Reviews
Amid the potentially gloomy narrative following Tuesday's wage growth data, falling food inflation is a welcome development ahead of tomorrow's CPI print. Nonetheless, this could do little to affect the Bank of England's decision to hike rates as Andrew Bailey and the rest of the MPC have their eyes keenly focused on the core print, which excludes volatile food and energy costs.
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Kylie-Ann GatecliffeVerified
Director at KAG Financial
This is a sign we are hopefully heading in the right direction. I personally don't think it will affect the next rate decision as I believe they will want to see things truly settle before jumping the gun and cancelling any further rate increases. But this combined with the recent rate decreases from lenders is definitely welcomed news.
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Graham CoxVerified
Director at Bridging Hub
With this latest fall in food inflation, the case for pausing the Base rate rises is even stronger. The most recent ones won't even have taken effect yet, and having applied the brakes so sharply, there's a danger of crashing the UK economy.
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Gary Bush0
Financial Adviser at MortgageShop.com
A lessening inflation figure of any kind is very much good news at this point. To see the large corporate supermarkets making huge increases in sales does reflect that these companies need to be trying harder to help the UK consumers with the trimming of the prices on staple items for their shopping baskets.
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James Miles0
Director - Mortgage Adviser at The Mortgage Quarter
No shocks here as shoppers become more savvy and tighten their belts at the tills as rising prices start to hit every day spending. We’re fully aware that low income families are being hit the hardest and taking the brunt of the economic downturn so we’re now seeing the affect of savings dwindle and unsecured debt payments increase so it’s not surprised spending has come down. Maybe we’ll see the Bank of England back off and give Joe Public a breather from their constant onslaught.
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Rob Gill0
Managing Director at Altura Mortgage Finance
There are increasing signs UK inflation is turning a corner, which will in turn ease pressure on the Bank of England to carry on hiking base rate. All eyes will now be on Wednesday's inflation number, any number below 7% will be seen as encouraging.