• The average annual grocery bill for UK households is expected to jump by £380 this year as supermarket inflation hit 8.3% over the four weeks.
• Households are switching to own-label products and discounters such as Aldi and Lidl in an effort to cut costs.
The average annual grocery bill for UK households is expected to get costlier as the households will now have to shell out an extra £380 on grocery purchases. This rate hike comes amidst the grocery price inflation, which hit 8.3% over the last four weeks from 7% in the prior month. The recent hike makes it the highest rate hike in 13 years.
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According to the latest data from UK data analytics firm Kantar Worldpanel, households prefer to switch to own-label products and discounters such as Aldi and Lidl. The families are now focused on reducing cost amid surging energy bills, supply chain disruption, and record fuel prices.
The latest rise is roughly £100 more than the number reported in April this year and inflation's effect on the sector. While the supermarket sales were up by 0.4% in the last four weeks, the overall sales were down by 1.9% for 12 weeks. However, the sales of cheapest own-label products registered a 12% growth, and own-label sales reported a rise of 2.9%.
UK's largest supermarket Tesco and discounters like Aldi and Lidl were the only supermarket chains to see an increase in their market share on a sales value basis over the period. Aldi and Lidl, the fastest growing supermarkets registered an increase of 7.9% and 9.5% respectively in sales in the past three months. At the same time, Morrisons saw the biggest fall of 7.2% in sales.
The surge in food prices will be visible in May's inflation data, scheduled to be released later today by the Office for National Statistics (ONS).
Recently, the UK's grocery trade body had warned that food price rises are likely to peak at up to 15% this summer, which would make it its highest level in more than two decades and added that the high levels are expected to remain well into 2023.
Kantar further revealed that despite the soaring cost of food, an extra £87 million was spent during the Platinum Jubilee celebration, with the rise in ice cream and alcohol sales by about a third compared with the 2022 average.
Let us look at three FTSE-listed retail stocks that saw a fall in sales.
Marks & Spencer Plc (LON: MKS)
Marks & Spencer Plc is an FTSE 250 listed retail company that offers its customers food, clothing, home, beauty, wine, gifts and furniture through its stores. Boasting a market cap of £2,767.04 million, it was trading at GBX 138.10, down by 2.23% at 08:13 AM (GMT+1) as of 22 June 2022. The company has given its shareholders a negative return of -9.59% over the last year, while its year-to-date return stands at -40.32%.
J Sainsbury Plc (LON: SBRY)
The market cap of the second-largest supermarket chain in the UK, J Sainsbury Plc, stands at £4,806.63 million as of 22 June 2022. The company operates through two segments that include Retail and Financial Services. As of 22 June 2022, at 08: 26 AM (GMT+1), the share price of the supermarket company was trading at GBX 205.00, down by 0.05%. It has given its shareholders a negative return of -24.10% over the last year, while its year-to-date return stands at -25.67%.
Ocado Group Plc (LON: OCDO)
The market cap of the FTSE 100 listed retail company, and the leading online grocery platform solutions provider, stands at £6,434.36 million as of 22 June. The company has recently announced a retail offer via PrimaryBid of new ordinary shares of 2 pence each in the capital to raise £575 million, which will be used to fund the expansion of its technology arm. The online retailer's share was trading at GBX 828.80, down by 3.13% at 08:48 AM (GMT+1). It has given its shareholders a negative return of -58.00% over the last one year, while its year-to-date return stands at -50.62%.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.