Football fans targeted by supermarkets as grocery inflation eases further
Grocery inflation has eased for the 16th month in a row, according to industry data released ahead of the general election also showing a price war aimed at luring fans during Euro 2024.
Kantar Worldpanel – which tracks supermarket till prices, sales and market share – said its measure of grocery inflation slowed to 2.1% in the four weeks to 9 June from 2.4% the previous month.
That left the figure at its lowest level since October 2021 – just months before the war in Ukraine prompted an unprecedented leap in till prices, becoming a key plank of the energy-driven cost of living crisis.
The report showed there is still upward pressure on the cost of items such as chilled fruit juices, vitamins and supplements and chocolate confectionery – the latter a consequence of poor cocoa harvests.
Prices were still falling fastest in toilet tissues, butter and milk, the study said.
Kantar said that despite progress in bringing down the pace of price rises at the tills, which has included the impact of discounting among chains, its survey work showed 22% of supermarket customers continued to struggle to make ends meet.
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UK economy flatlines in April
A greater proportion of shoppers, however, were feeling better off.
The report suggested that 36% saw their financial position as ‘comfortable’, a level not surpassed since November 2021.
It can be mostly explained by pay growth outstripping inflation for more than a year. Official figures last week showed basic pay rising at a pace of 6%.
But despite improving personal finances, Kantar reported a hit to revenue growth values among grocers. It blamed the easing in grocery inflation and an impact from the sixth-wettest spring on record.
It said that consumers bought nearly 25% fewer suncare items over the four-week period compared with last year, while prepared salads dipped by 11%. Fresh soup sales, on the other hand, jumped by almost 24%.
Fraser McKevitt, Kantar’s head of retail and consumer insight, said promotional competition for business among supermarkets had evolved to target football fans.
England and Scotland are competing in Euro 2024. Pic: Reuters
“With the men’s UEFA European Football Championship under way, the supermarkets will be waiting to see if positive performances by England and Scotland can deliver a win at the tills too.
“The grocers are looking to entice in consumers enjoying this year’s tournament, with the proportion of beer and lager sales on promotion leaping up to over 40% in the latest four weeks.
“Retailers will be competing with fans heading out of the house to watch the football as well as with each other.
“Pubs especially could benefit from a boost – whether or not football comes home.
“Throughout the last tournament held in 2021, sales of food and non-alcoholic drinks in pubs soared by 60% compared with the average month that year.”
Kantar’s report was the last ahead of the election and released less than 24 hours before the latest official inflation figures.
They are tipped by a poll of economists, carried out by the Reuters news agency, to show the main consumer prices index (CPI) measure of inflation slowing to 2% in the 12 months to May from 2.3% the previous month.
That would leave the rate level with the Bank of England’s 2% target rate.
However, the progress is not expected to result in an interest rate cut on Thursday because a majority of the Bank’s rate-setting committee are worried about inflation ticking up again during the second half of the year.
Financial markets currently see just a 9% chance that the Bank rate will be cut to 5% from 5.25% this week.
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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