With food prices continuing to rise and a tough Christmas holiday period ahead, many U.K. consumers will be managing their budgets more tightly than at the start of the cost-of-living crisis, according to an analysis commissioned by grocery retail app Ubamarket.
The cost-of-living crisis is expected to have an increasingly significant impact on retailers and consumers in the U.K. market, with British Retail Consortium (BRC) advising that in the past month, food inflation reached 12.4 percent – the highest since records began, and that households are now due to face prices that are 7.4 percent higher than last November, and up from 6.6 percent in October.
The situation has not been helped by the U.K.’s departure from the European Union, with recent research from the Center for Economic Performance (CEP) at the London School of Economics determining that as a consequence of Brexit, U.K. consumers saw food prices increase by an average GBP 210 (USD 259, EUR 245) between 2019 and last year, leading to a total increase of GBP 5.8 billion (USD 7.1 billion, EUR 6.8 billion).
Ubamarket's latest retail trends report found 54 percent of Brits have started imposing a limit on how much they spend at the supermarket during the cost-of-living crisis. This, it said, is reflective of the major decline in top-up missions and impulse purchasing that is traditionally seen across the sector, as consumers switch to prioritizing essential grocery items to remain in line with preplanned budgets as living costs skyrocket.
It added that consumers are likely to face this prospect for a while, with the governor of the Bank of England, Andrew Bailey, warning that rising food prices are one of the major risks that could lead to persistent inflation into 2023.
With its research exploring how the drop in living standards is affecting the grocery retail sector, Ubamarket's report also found that 55 percent of U.K. consumers believe supermarkets don't help consumers enough to alleviate food price inflation during the cost-of-living crisis, with 60 percent of shoppers carrying out their weekly food shop across multiple retailers in a bid to keep their expenditures down.
This data is reflective of a new trend called “shop-jumping,” as consumers increasingly prioritize bargain-hunting across multiple retailers in search of the best deals, Ubamarket said.
It added the impact of Brexit on food inflation is disproportionately affecting the poorest households in the U.K., a class that statistically spends a larger share of its income on food.
Ubamarket CEO Will Broome said it's no surprise that consumers are feeling let down by the grocery sector.
“Supermarket chains and suppliers rely on narrow profit margins, and while most of the retail sector have felt the effects of the rising rate of inflation, consumer goods and foods have bore the brunt of it,” Broome said. “The news about Brexit driving up food inflation clearly illustrates the impact that red tape has had on food imports from the E.U. – retailers have clearly passed these costs onto customers.”
Ubamarket's research found that amidst the cost-of-living crisis, 15 percent of Brits state supermarket prices are now so expensive that they’ve had to start using food banks to feed themselves and their families. Furthermore, 64 percent said supermarket price matching and on-shelf offers do not go far enough to alleviate the increasing food bills, while 53 percent say loyalty points schemes no longer help with cutting the cost of their weekly food shopping, and are not a method of securing their business.
"At Ubamarket, we believe it is the responsibility of retailers to help curb inflation and respond by offering seasonal savings and price cuts for consumers where possible,” Broome said. “In light of this, we’ve currently introduced initiatives with some of our partners like the Nash & Gardner’s Budgens in Islington to match inflation and discount hundreds of products on our app accordingly.”
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