Tesco said it was offering “immediate help for families all over the country” last week when launching a £500m price-cutting offensive.
British families will certainly be looking forward to some relief from the UK’s biggest supermarket next month after recording the biggest increase of all the big four supermarkets in September.
The latest Grocer Price Index, for the month to 27 September, revealed that Tesco prices, before taking account of promotions, were 1% higher compared with August. In the same period, Morrisons and Sainsbury’s even cut their prices month-on-month, by 0.4% and 0.1% respectively.
However, the full impact of Tesco’s ‘Big Price Drop’ has yet to fully feed through into the figures compiled for The Grocer by BrandView.co.uk. The numbers are based on an average taken from weekly shops done at the leading supermarkets during the month, so only the last shopping trip completed a day after Tesco began slashing its prices on Monday took account of the price decreases.
The Tesco move could spark a price battle between the supermarkets, but in the meantime UK shoppers typically pay much more for a shopping basket than they did a year ago. On average, the prices that shoppers pay at the tills, once promotions are factored in, were 3% higher in September than in the same month last year.
The only exception to the price inflation story was Asda. While all the other big four supermarkets are running with prices after promos 4% higher than a year ago, Asda has managed to shield consumers from the impact of food price inflation. Both in terms of base prices and prices after deals, the average cost of a basket of groceries at Asda remains the same as it was last year.
Its rivals have at least managed to slow the rate of price increases over the summer. It is the second month in a row that average prices across the big four were up 4%, or 3% after taking into account the impact of retailer deals. This compares positively with the data for July, when prices rose 5% before deals and 4% after.
Regarding individual price categories, only the price of household goods and fruit and vegetables in September remained unchanged compared with last year. Fruit and veg prices remained in check across the supermarkets compared with last year, while it was Morrisons that led the way in keeping average household product prices down
Unsurprisingly, tobacco was one of the biggest risers year-on-year up 12% following the VAT hike in January and the higher taxes announced in the March budget.
The survey revealed that customers visiting the deli counters or the bakery aisles at the major multiples are also likely to be forking out significantly more than a year ago. Prices in both categories rose 12% in September compared with last year.
Meanwhile, sales of biscuits, confectionery and snacks jumped the most month-on-month. As sugar prices remained at record highs, category prices leapt 2.6%.