Grocery inflation in Britain nudged down to 5.0% over the four weeks to Aug. 10, data from market researcher Worldpanel by Numerator showed on Tuesday, providing limited relief for consumers.
The figure, the most up-to-date snapshot of U.K. food inflation, compares to 5.2% in last month's report. Official U.K. inflation data for July will be published on Wednesday.
Britain's food retailers have said that increased employer taxes and regulatory costs as well as higher staff wages have added to the inflationary pressure of rising prices on many commodity markets.
"We've seen a marginal drop in grocery price inflation this month, but we're still well past the point at which price rises really start to bite and consumers are continuing to adapt their behavior to make ends meet," Fraser McKevitt, head of retail and consumer insight at Worldpanel, said.
He noted consumer trips during the three months to mid-July to casual and fast service restaurants were 6% lower than a year ago. But as consumers made savings outside the home, they sought treats in store.
Sales of branded grocery items were up 6.1% over the four weeks, while sales of own-label alternatives were up 4.1%. Among the fastest price rises were for chocolate, fresh meat and coffee and the fastest falls were in champagne and sparkling wine, dog food and sugar confectionery, Worldpanel said.
Trade body the British Retail Consortium, which represents Britain's biggest retailers, has predicted food inflation will hit 6% by the end of the year, putting more pressure on household budgets in the run-up to Christmas.
The Bank of England (BoE) has forecast it will hit 5.5% before Christmas and then recede as it anticipates falls on commodity markets. Worldpanel said U.K. grocery sales grew 4.0% over the four-week period year-over-year, indicating sales volumes were down after inflation was taken into account.
Discounter Lidl and online supermarket Ocado were Britain's fastest growing grocers over the 12 weeks to Aug. 10, with sales up 10.7%. Sales at industry leader Tesco rose 7.4%, with its market share up 0.8 percentage points over the year to 28.4%. However, number three player Asda struggled with sales down 2.6% and a 0.9 percentage points loss of market share year-over-year.
