Spending at supermarkets rose considerably less in July (5.2%) than in June (9.8%), as the rate of food price inflation continued to slow after peaking in March, new data reveals.
The figures from Barclaycard show concern around rising food prices remains high at 91%, causing 70% of shoppers to look for ways to reduce the cost of their weekly shop, the highest percentage so far this year.
Of these, 13% say they are having to remove some items at the checkout to avoid going over budget. To help save money, 35% are buying items in bulk because they cost less in the long-term, and 41% are shopping at multiple supermarkets to source a range of deals.
Concerns around food prices and the rising cost of living are also impacting economic confidence as just 21% report feeling confident in the strength of the UK economy, down 2% month-on-month in July.
Meanwhile, a slightly higher proportion of Brits had noticed examples of ‘shrinkflation’ in July (73%) compared to June (70%), with chocolate (56%), crisps (49%) and packets of biscuits (46%) remaining the products most frequently cited as being impacted by this growing trend. As a result, 21% of the shoppers who have noticed signs of shrinkflation are switching to brands that haven’t changed the size of their products.
In addition, 22% of Brits have noticed that some of the alcoholic drinks they buy have become weaker or contain less alcohol, yet still cost the same or more than they used to, otherwise known as ‘drinkflation’. This could be due to manufacturers changing their products ahead of the recent changes to alcohol duty introduced on 1 August, meaning that alcoholic drinks are now taxed according to strength instead of type.
Abbas Khan, UK Economist at Barclays, said: “Over the first half of 2023, high inflation rates have weighed on real household disposable incomes and constrained consumption. On the bright side, this headwind is expected to abate over H2 as inflation in essential categories such as energy and food is set to ease.
“However, offsetting this, more households are set to experience higher mortgage costs as they refix onto higher rates. Accordingly, while we do not expect a consumer recession in the coming quarters, growth is likely to be meagre.”
