Soaring food prices accompanies summer sports festivities enjoyed by shoppers

In the four weeks leading up to 4 August 2024, supermarket sales saw a significant boost, with take-home sales rising by 3.8% compared to the same period the previous year. This uptick was observed across various retailers, including Ocado, Waitrose, and Sainsbury's.

Ocado, the online grocery giant, continued its six-month streak as the fastest growing grocer, with sales increasing by 11.3%. Waitrose, on the other hand, saw its market share increase by 0.1 percentage point to 4.5%, and its sales also rose by 4.5%. This marked Waitrose's strongest growth since November 2023. Sainsbury's also experienced growth, with its market share increasing by 0.5 percentage points and sales rising by 5.2%.

The rise in supermarket sales was not limited to groceries alone. Spending on deals increased by 15%, and the amount spent on ice cream was 23% higher. The football fever that swept the nation, with England's men's team reaching the Euro 2024 final, led to a record-breaking day of beer consumption. On that day, £10 million was spent on beer, making it the most spent on a Sunday in more than three years.

The sales of certain food items also saw a significant surge. Sales of burgers leapt by 32%, while chilled prepared salads, wine, nuts, and crisps all saw increases of 22%, 35%, 60%, and 10% respectively, on the Friday of the Opening Ceremony in Paris.

However, the rise in supermarket sales was not without its challenges. Food price inflation rose by 1.8% in the same period, up from 1.6% at the start of July. This inflationary pressure could increase the overall pressure on inflation, but it is expected to have less impact than energy inflation.

Despite the rise in inflation, a September rate cut from the Bank of England looks unlikely due to a healthier jobs market and wage rises outstripping inflation. However, the market still expects at least one more rate cut before the end of 2024, although further signs of inflationary pressure could delay this until 2025.

In the four weeks before August 4, customers showed a preference for practical, everyday items that offer clear benefits, are easy to integrate, durable, and sustainable. This preference for simplicity and visible value was reflected in the sales data, with complex devices with many features not seeing the same growth.

In addition, the cost of 182 product categories in supermarkets is rising, while the costs in 89 others are falling. The increased spending on essentials such as cough lozenges, up by 28%, indicates that people have been battling with COVID-19 and other summer colds.

In conclusion, the four weeks leading up to 4 August 2024 saw a surge in supermarket sales, driven by a variety of factors including sporting events, inflation, and consumer preferences. Despite the challenges, the market remains optimistic about future growth, with at least one more rate cut still expected before the end of the year.