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Food price inflation has soared to its highest level on record, according to the month BRC-Nielsen IQ Shop Price Index.
The research found that food inflation accelerated strong to 11.6% in October, up from 10.6% in September, which is a new record high for the category.
Average three-month food price inflation now stands at 9.7%.
Fresh Food inflation strongly accelerated in October to 13.3%, up from 12.1% in September, while ambient food inflation accelerated to 9.4% in October, up from 8.6% in September – with both categories experiencing their fastest rate of increase on record.
Overall shop price annual inflation accelerated to 6.6% in October, up from 5.7% in September, which is also a record for shop price inflation since this index started in 2005.
Non-Food inflation accelerated to 4.1% in October, up from 3.3% in September, which was above the 3-month average rate of 3.4%.
BRC chief exec Helen Dickinson commented: “It has been a difficult month for consumers who not only faced an increase in their energy bills, but also a more expensive shopping basket. Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market. Even the price of basic items went up, with the price of the humble cuppa rising, as tea bags, milk and sugar all saw significant rises. While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike.
“With Christmas fast approaching, customers are looking for any sign of respite, but it is increasingly difficult for retailers to shoulder the ongoing supply chain pressures. The Government can support households by reducing the cost burden that prevents retailers from keeping prices down for their customers. Government must freeze business rates to prevent an additional £800m bill landing on the plates of retailers and in turn their customers in 2023.”
Mike Watkins, head of retailer and business insight, NielsenIQ, added: “External factors are keeping shop price inflation at record highs and the challenging economic conditions are significantly impacting consumer confidence and retail spend. With pressure growing on discretionary spend across both non-food and food retail, delivering good value is the table stake in the battle for shopper loyalty over the next 8 weeks.”
Morning update
UK and European Coke bottler Coca-Cola Europacific Partners has announced strong price and volume-driven growth in the third quarter.
Reported revenues in the quarter were up 20%, with FX-neutral revenues up 18%.
Comparable volumes were up 11.5% (and up 5.5% against pre-Covid 2019) driven by the continued recovery of the away from home (AFH) channel, alongside the return of tourism and favourable weather supporting volume growth in Europe and soft comparables in API due to prior year restrictions.
AFH volumes were up 16% to rise 2% above 2019 levels, reflecting the continued recovery of the AFH channel across both Europe (up 16.5% year on year) and Asia Pacific (up 13.5% on 2021).
Home consumption proved resilient with comparable volumes up 8.5%.
Revenue per unit case was up 6%, reflecting favourable price realisation across all markets, including the benefit of additional underlying pricing coming through in some markets, alongside positive pack and channel mix led by the continued recovery of the AFH channel
The strong third quarter growth has seen CCEP raise full year guidance, with pro forma comparable growth now expected to be 15-16% (previously 11-13%) weighted towards volume over price/mix and reflecting recovery of the AFH channel.
Operating profit: pro forma comparable growth is forecast to be 11-12% (previously 9-11%)
CEO Damian Gammell commented: “We are pleased to have delivered another strong quarter following a great first half. We achieved solid top line growth and value share gains across our markets. Key to this was the continued recovery of the away from home channel, a return to travel and tourism for many consumers, great summer weather in Europe and a resilient home channel.
“Given our strong year to date performance, we are raising top line, bottom line and free cash flow guidance for 2022 and declaring a record dividend. We are confident in the resilience of our robust categories and the strength of the relationships we have with our customers, who continue to share in our success, despite a more uncertain outlook. We are also effectively managing key levers of pricing* and promotional spend across our broad pack offering, alongside our focus on efficiency.
“Our success will continue to be determined by our great people, great service, great beverages, done sustainably. We are a bigger and better, more diverse and resilient business, enhanced by our bold and fantastic acquisition last year. Alongside our strong performance this year, we are today committing to even more ambitious objectives over the mid-term.”
On the markets this morning, the FTSE 100 is up 0.1% to 7,194.8pts so far this morning.
Risers include 3.1% to 23.7p, Premier Foods, up 1.7% to 106.8p and Marston’s, up 1.7% to 37.6p.
Fallers include Science in Sport, down 6.7% to 14p, British American Tobacco, down 3.6% to 3,340p and Pets at Home, down 3.3% to 284p.
Yesterday in the City
The FTSE 100 gained 1.3% yesterday to close at 7,186.2pts.
Ocado was one of the market’s big movers, jumping 38.6% on the announcement of a partnership with South Korea’s Lotte Shopping to roll out its technology and fulfilment centres in the country. Ocado UK retail partner Marks & Spencer rose 5% to 110.8p given its interest in the grocery tech firm.
Other risers included THG, up 11.5% to 59.3p, Just Eat Takeaway.com, up 7.1% to 1,599.2p, Hotel Chocolat, up 6.8% to 157p, B&M European Value Retail, up 4.8% to 338p, SSP Group, up 2.8% to 208p, Domino’s Pizza Group, up 2.7% to 232.4p and Sainsbury’s, up 2.7% to 199.6p.
The day’s fallers included McBride, down 4% to 23p, Glanbia, odnw 2.9% to €11.52, Kerry Group, down 2.8% to €87.38, Naked Wines, down 1.3% to 107.2p, Unilever, down 0.7% to 3,947.5p and Coca-Cola HBC, down 0.6% to 1,890.5p.
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