Key events
Kantar: Too early to call top on grocery inflation
The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top, says Kantar’s Fraser McKevitt.
McKevitt explains:
We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year.
We think grocery inflation will come down soon, but that’s because we’ll start to measure it against the high rates seen last year. It’s important to remember, of course, that falling grocery inflation doesn’t mean lower prices, it just means prices aren’t increasing as quickly.
UK grocery inflation slows, but still 17.3%
It’s official: UK grocery price inflation dipped slightly in April.
Data firm Kantar has confirmed that consumers are still paying 17.3% more than this time last year at UK supermarkets, as they told the Today programme this morning.
That’s slightly lower than last month’s 17.5% grocery inflation, but still means that housholds are facing painful price hikes.
The cost of living crisis has spurred demand for own label sales – they rose 13.5% year on year, with the very cheapest value lines soaring by 46%.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
“The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top.
“We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year.
“It’s important to remember, of course, that falling grocery inflation doesn’t mean lower prices, it just means prices aren’t increasing as quickly.”
Easter spending still rose, with 38 million chocolate eggs and treats bought in the run-up to Easter Sunday – five million more than last year – and hot cross bun sales up 5% on last year.
Nestlé’s petcare division raised its prices by 12.2% in the last quarter, helping to drive a near 16% increase in revenues.
Prices of milk products and icecream were hiked by 11.8%, while ‘prepared dishes and cooking aids’ cost 11.1% more.
Petcare was the largest contributor to organic growth, led by brands such as Purina ONE, Purina Pro Plan and Friskies, followed by confectionery.
Introduction: Sharp price hikes drive up Nestlé profits
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Food giant Nestlé has reignited the debate over greedflation by beating sales forecasts this morning, thanks to price increases.
The Swiss company behind Nespresso pods, KitKat chocolate bars and Maggi noodles says it hiked its prices by 9.8% in the first three months of this year, which it blamed on “significant cost inflation”.
Total reported sales increased by 5.6%, while sales volumes edged down by 0.5% as customers largely swallowed high prices in the shops.
This left Nestlé with organic revenue growth of 9.3%, higher than expected, with sales rising to 23.5bn Swiss francs, beating average estimate of 23.27bn.
🚨 $NESN.SW Nestle 1Q Organic Revenue Beats Estimates:
∙ Organic revenue +9.3%, est +7.25% (Cons)
∙ Pricing +9.8%, est +9.51%
∙ Real internal growth -0.5%, est -2% https://t.co/0s1LENPdTL— Smartkarma (@smartkarma) April 25, 2023
Mark Schneider, Nestlé CEO, says “responsible pricing” helped pump up sales growth:
“Nestlé delivered strong organic growth in the first quarter, as our teams worked diligently to protect volume and ensure resilient mix.
Portfolio optimization efforts and responsible pricing helped to offset the ongoing pressures from two years of cost inflation.
UK households, who are facing the worst food price inflation in 45 years, may question how responsible these price increases are. Central bankers, worried that company price rises are driving up inflation, may have concerns too.
But there are hopes this morning that grocery inflation may have peaked.
Kantar, the data research group, is expected to report this morning that the pace of price increases at UK supermarkets slowed this month.
Kantar’s Fraser McKevitt told Radio 4’s Today programme that grocery inflation dropped to 17.3% per year in the four weeks, down from 17.5% a month ago.
McKevitt calls it a “marginal drop”, and cautions that it’s probably a bit early to say we’ve seen the peak in grocery inflation.
But after 10 months of double-digit grocery price inflation, the UK is starting to lap last year’s price rises, so it’s likely that inflation (which compares prices to a year ago) will come down, he predicted.
But, we won’t be entering an era of falling prices, he adds, even if prices rise less quickly than before…..
The agenda
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7am BST: UK public finances for March
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8am BST: Kantar grocery market share and inflation data
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10am BST: Bank of England deputy governor Ben Broadbent speech: ‘Monetary policy: prices versus quantities’
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11am BST: NatWest bank holds AGM
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11am BST: CBI industrial trends report
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2pm BST: US house price index
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3pm BST: US consumer confidence figures
