We All Spent Much More This Christmas After Food Prices Jumped Again

There are three items driving grocery inflation: feed, fertiliser and fuel.
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Fresh food prices increased at a record rate across December, meaning UK consumers ended up spending a lot more this Christmas.

Here’s a breakdown of the numbers.

How much did food increase in price?

New figures from the British Retail Consortium (BRC) and the data firm Nielsen show fresh grocery prices increased by 15% in December compared to the previous year.

For comparison, the inflation rate for fresh produce was at 14.3% only in November.

When including non-fresh food, the inflation rate was slightly lower at 13.3% for December – but, according to the BRC, this was the highest overall monthly rate for all groceries since it began collecting the data back in 2005.

Why is the overall inflation rate lower than food?

UK inflation for all goods and services for November was at 10.7%, a slight drop month on month.

Food is higher because of the soaring cost of fertiliser, energy and animal food – all items which have become more expensive due to the war in Ukraine.

Discounts on non-food products did also bring overall shop price inflation from 7.4% to 7.3% in a bid to rid themselves of excess stock from the supply chain issues seen in 2022.

But the economy as a whole is struggling due to ongoing trade issues linked to Brexit, while employment, demand and production have all been affected for manufacturers in December, as the economy is expected to be in recession.

What’s happened to our shopping habits?

Market share of UK supermarkets
Market share of UK supermarkets

Discount supermarket Aldi has seen an uptick in shoppers throughout the cost of living crisis, and December was no exception.

It claimed that its sales soared by 26% last month, reaching £1.4 billion in the UK and Ireland for the first time ever, particularly due to the sales of fresh meat and cheese.

However, despite UK consumers pursuit of discounts, we all still ended up spending more over Christmas.

Fraser McKevitt, head of retail and consumer insight at market research company Kantar, said: “Monthly grocery sales were a whopping £1.1 billion higher in December versus last year, breaking the £12 billion mark for the first time.”

This is due to the increasing cost of food and drink rather than people buying more, according to Kantar’s monthly monitor.

He said: “Value sales are up significantly but grocery price inflation is the real driving factor behind this, rather than increased purchasing.”

The actual volume of sales fell by 1% over December compared to the same period last year, according to Kantar – even though we spent more than a fifth more on mince pies in December, and 16% more on Christmas puddings but only 6% more in terms of volume.

What happens next?

BRC does not think food inflation is going to decline any time soon.

“It was a challenging Christmas for many households across the UK.

“2023 will be another difficult year for consumers and businesses as inflation shows no immediate sign of waning,” the BRC’s chief executive Helen Dickinson said.

Many businesses are also hoping that the Treasury will extend the energy support scheme past April, to avoid having to pass even more costs onto consumers.

Dickinson said: “Without the scheme, retailers could see their energy bills rise by £7.5 billion. The government must urgently provide clarity on what future support might look like, or else consumers might pay the price.”