Food inflation hits a record high - shoppers will pay £811 more for groceries

Food inflation rose to its highest ever level in February 2023, climbing to 17.1% despite a slowing rate of CPI inflation, according to the latest data from analytics group Kantar.

The jump from 16.7% in January takes grocery price inflation to the highest level recorded by Kantar. Its latest research showed grocery price inflation is the most important financial issue for consumers, second to rising energy costs.

“The numbers speak for themselves,” said Fraser McKevitt, head of retail and consumer insight at Kantar. “If people don’t change how they buy their groceries, households are facing an £811 increase to their average annual bill.”

What is driving food inflation?

Prices are rising the fastest for milk, eggs and margarine, Kantar said. 

Consumer group Which? also reflected this, reporting the a 29.9% monthly rate of inflation for butter and spreads, while milk and cheese prices increased 26.1% and 23.8% respectively. 

It’s unlikely we’ve seen the last of price increases given consumers have also been dealing with fruit and vegetable shortages, with some supermarkets restricting the number of items customers can buy due to supply chain issues. 

This “threatens to make matters worse”, says Myron Jobson, senior personal finance analyst at interactive investor as “the full extent of the recent uptick in the price of these items is yet to filter through”. 

On top of rising grocery bills households are having to deal with a host of issues at the moment. Homeowners are facing increased mortgage payments and tenants are having to pay record high rents, and both energy bills and council tax bills will go up in April. 

Which is the cheapest supermarket?

Consumers have increasingly turned to supermarket’s own label ranges to cope with price increases, with sales of these lines up 13.2% in February, well ahead of 4.6% increase in the sales of branded products. 

But the latest research by consumer group Which? Found that own-label budget items have a higher inflation rate than branded ones, with own-label items rising by 21.6% year-on-year to the end of January compared to 13.2% for branded ones. 

Additionally “many items that have not risen in price are shrinking in size”, says Jobson. “Known as shrinkflation, it means we are paying the same price for a smaller product.”

Which? Placed the annual inflation figure for the popular supermarket food and drink at 15.2% for the three months to 31 January 2023, up from 14.7% for the three months before. 

So which supermarket is actually the cheapest? Data from Which? found that Aldi was the cheapest supermarket in January 2023, but its latest figures also show Aldi products have the second highest levels of inflation, up 22.5% for the month to 31 January. 

Lidl products had the highest level of inflation, up 23.6%. 

To rate the cheapest supermarket, Which? Looked at 45 popular groceries at eight of the biggest supermarkets. At Aldi the basket of goods was £82.03 on average. The same shop at Waitrose was £107.71 on average, a difference of £25.68.

It also compared the cost of a larger trolley of 144 items – the original 45, plus 99 more - including things like Andrex toilet paper and Cathedral City cheese. It excluded Aldi and Lidl in this comparison as they do not stock some brands and found in this case, Asda was the cheapest supermarket. 

It cost £363.29 on average for this shop. The next cheapest was Sainsbury's at £375.84,  costing £12.55 more.

Waitrose was an eye-watering £45.43 more expensive than Asda, coming to a whopping £408.72, on average, for the trolley of comparable goods.

If you are buying a regular basket or trolley of goods, it is worth comparing costs as the savings throughout the month can be significant. 

One useful tool to consider is the trolley app - which allows you to compare prices across all major supermarkets. 

It’s also worth noting the headline grocery price inflation can “dramatically differ from your own personal inflation number,” adds Jobson. “As the cost of living continues to rage on, it is important to evaluate our spending habits. You must look at what makes sense for you – not an arbitrary measurement from anyone else.”