Monday 25 March 2019

Grocery prices rise as Brexit costs set to drive more increases

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Gavin McLoughlin

Gavin McLoughlin

Grocery prices rose 1.5pc in the 12 weeks to February 24, and further increases are likely on foot of Brexit, according to market researchers Kantar Worldpanel.

Extra customs paperwork plus any tariffs that emerge will make British goods more expensive for Irish importers, Kantar's consumer insight director Douglas Faughnan said.

It was the fourth period in the row where prices went up. Chocolate and beer were among the categories to post increases, going up 7.1pc and 5.7pc respectively compared to the same time last year.

Frozen chips rose 3.1pc and ice cream rose 2.8pc.

That was likely fuelled, in part at least, by stronger sterling versus the euro in the period which would have made UK imports more expensive for Irish retailers.

"While branded sales have remained resilient despite higher prices, growing at 3pc and accounting for 47.3pc of overall sales, continued inflation may drive Irish consumers to trade down to cheaper own-label ranges. These have already grown at 4pc in the latest 12 weeks," Mr Faughnan said.

It was the first time since February 2017 that prices had gone up for four periods in a row. Kantar said that fierce competition had been driving deflation in the sector until then. The figures showed Dunnes retained its position as biggest supermarket by market share, on 23pc. Tesco was second on 21.6pc while SuperValu was third on 21.3pc.

They will face a fresh challenge from the German discounters if inflationary pressure emerges.

"Shoppers may opt to save money by moving more of their spend towards the retailers they perceive as offering better value," Mr Faughnan said. "Each of the five major supermarkets played host to at least two-thirds of the population in the past 12 weeks, demonstrating that Irish shoppers are already prepared to shop around for the best deals.

"Retaining the loyalty of their existing shoppers will be a key priority for retailers in the face of increased price pressure," Mr Faughnan said.

He said Aldi had posted double-digit sales growth for the second period in a row, while Lidl sales were up by 6pc year-on-year. Their share of the market was 11.2pc and 11pc respectively. Though Tesco and SuperValu saw their market shares dip, they each posted sales growth year-on-year.

Valentine's Day helped boost sales of chilled ready meals and desserts, while wine and chocolate sales also increased.

"Convenience continues to be a major priority for people celebrating with a night in ... however, as Lent kicked off on the 6th of March, some of these more indulgent categories may face a more challenging period in the run up to Easter," Mr Faughnan said.

Overall the value of sales rose 3.5pc year-on-year during the period - helped by the price inflation.

Irish Independent

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