Shoppers are trading down into private label to save money ahead of further anticipated price hikes in the supermarkets, according to the latest industry data out this morning.
Food sales increased by 2.8% year on year in January, ramping up from 1.7% growth in December but well down on the 6.1% recorded in the same month of 2024, the BRC and KPMG reported.
It comes as January sales provided a welcome boost to the high street, with stores delivering their strongest growth in almost two years, albeit against weak comparables.
Non-food sales jumped 2.6% year on year last month, compared with a decline in January 2024, and total UK retail sales increased 2.6% in January.
However, viewed over a three-month period that included Christmas and Black Friday, non-food sales have flatlined.
“Overall, the golden quarter failed to shine,” said Linda Ellett, UK head of consumer, retail & leisure at KPMG.
She warned the trading environment remained tough for retailers, with consumer demand still subdued and household essential bills still high, with business costs also coming under pressure.
British Retail Consortium CEO Helen Dickinson worried about the inflationary pressures stemming from higher National Insurance contributions, the higher national living wage and a new packaging levy.
“Many businesses will be left with little choice but to increase prices, and cut investment in jobs and stores,” she added. “Government can mitigate this by ensuring its proposed business rates reforms do not result in any shop paying more in business rates.”
IGD CEO Sarah Bradbury highlighted the January shopper confidence index declined by three points.
“With unemployment at 4.4% (+0.4% versus this time last year), shoppers have responded by employing strategies to control their spend,” she said.
“The notable increase in volume over value sales suggests a shift towards private-label products and a change in purchasing categories, as shoppers anticipate further price rises for food and drink.”
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