The cost of living crisis that has plagued millions of households since the end of 2021 appears to be easing, as data shows that UK grocery price inflation fell to a 30-month low in April.
The latest data from Kantar shows that food price inflation fell to 3.2% in the four weeks to mid-April, down from 4.5% the previous month. The lowest rate of inflation since November 2021
In April, a substantial increase in promotional spending by shops contributed to this fall, Kantar says. Goods bought on sale accounted for 29.3% of supermarket sales during April, the highest percentage since June 2021.
Lower Grocery Prices Boost the Economic Recovery
Food price inflation was the key factor in the decline in the UK's headline measure of price growth, falling from 3.4% the previous month to 3.2% in March. Both economists and the Bank of England expect headline inflation to fall below the BoE's 2% target in the spring, as the cap on energy bills is lowered from April onwards.
The official inflation rate for April will be published on 22 May. A drop in food price inflation could stimulate spending, helping the economy to rebound from last year's recession. Further support for this economic recovery could come from the steady rise in real wages.
Forecasters and analysts are divided on future inflation in the UK. While the Bank of England has predicted that it will reach around 3% by the end of next year, Sir Dave Ramsden believes it could remain at around 2% for the next three years.
Reuters economists have predicted that inflation will hover around 2.2% per quarter until at least the end of next year. Furthermore, the official measure of food inflation has risen sharply, peaking at 19.2% in March 2023, after 45 years.
Such divergent projections highlight the complex and unstable dynamics of inflation and its impact on households and the economy, as well as the impact of geopolitical factors on food and energy prices.
Trends in UK Food Sales and Inflation
The Office for National Statistics recorded a fall in food inflation to 4% in March, the lowest since November 2021, due to year-on-year reductions in fish and dairy prices.
Kantar's findings reflect these changes, emphasising the rapid growth in sales in upmarket and low-cost supermarkets, bucking previous trends in the cost of living crisis.
In fact, consumer preferences are changing, with online shopping and discount retailers becoming increasingly popular with consumers.