Shoppers turn to packed lunches to keep budgets in line – as grocery price inflation ‘remains high’
Shoppers are turning to packed lunches in an attempt to try and keep their budgets in line, with 86 million more lunchboxes brought to work last year, new research suggests.
Spending on alcohol also fell by more than half in January compared with December – with people taking part in Dry January and other health challenges, according to industry data.
It comes as figures show the recent trend of a gradual easing in grocery price inflation was effectively halted in January as retailers reined in special offers after Christmas.
Kantar Worldpanel, which tracks sales among chains, said the rate of annual price rises for food, drink and other household essentials remained high at 6.8% during the four weeks to 21 January.
It represented a drop of just 0.1% on December’s grocery inflation rate of 6.9%.
However, separate figures from the British Retail Consortium (BRC) – a trade association which represents supermarkets – and NielsenIQ, also out on Tuesday, are more upbeat.
Their research suggests shop price inflation – which includes both groceries and non-food items like clothes – fell this month to its lowest level since May 2022.
BRC chief executive Helen Dickinson said the drop was driven mostly by offers on non-food items. However, a drop in the price of tea and milk was also said to be a factor.
The pace of grocery price rises – and the more general consumer price index (CPI) of inflation – had been declining towards the end of last year.
But CPI surprisingly went up earlier this month, and there has been growing concern that prices will soon be hit by disruption to supply routes in the Red Sea, amid attacks on shipping linked to the Israel-Hamas war.
However, Kantar’s head of retail and consumer insight Fraser McKevitt said its latest figures were “more about the battle between the supermarkets to offer best value, rather than geopolitics”.
He said: “Retailers have taken their foot off the promotions gas slightly as we’ve come into the new year, and that’s meant inflation hasn’t fallen as quickly.
“Items bought on offer accounted for 27% of all grocery spending in January versus 32% last month.
“Christmas is always a bumper period for deals and the grocers pulled the price lever especially hard in December, as they sought to get shoppers through their doors.”
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Kantar said Britons were continuing to trim costs and keep an eye out for offers while inflation remained “stubbornly high”.
Mr McKevitt said: “There’s still plenty of opportunities for consumers to make savings. The overall trend in offers is up versus this time last year, and nearly £500m more was spent on offers this January than in the same month in 2023.”
In addition, Researchers also said “Veganuary” could be responsible for an 8% increase in sales of own label plant-based ranges.
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How inflation is affecting daily lives
However, despite grocery inflation remaining high, the pace of price rises is less than half of what it was a year ago, when Kantar’s rate for January was 16.7%.
Meanwhile the BRC and NielsenIQ said shop price annual inflation eased to 2.9% in January, down from 4.3% in December – the lowest since May 2022.
The researchers also said food inflation eased from 6.7% in December to 6.1% in January.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Shoppers are seeing savings at the checkout with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall.
“However, consumer demand remains fragile as most households are yet to feel better off after nearly two years of inflation.”
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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