Shopper conference stable amidst rising inflation
More people also expect to be better off financially than worse off in the year ahead.
Growing concerns about rising inflation have contributed to a small dip in shopper confidence, according to the IGD’s latest Shopper Confidence Index.
The Index revealed 79% of shoppers expect food and grocery prices to increase in the year ahead and 14% expect them to rise “significantly”, up from 8% in April 2021.
21% of lower income households expressed concern about rising food prices compared to 11% of higher income households.
The numbers follow acceleration of inflation in the UK and warnings from the Bank of England of further increases, despite low inflation for the food and grocery industry.
Despite this rising concern, shopper confidence continues to remain relatively stable, dropping by just one point to -3, driven by the continued vaccine roll-out but balanced by the new Delta variant and the four-week delay to the lifting of restrictions, ending on July 19.
Financial confidence is at its highest level ever recorded at +4, meaning that more people expect to be better off than worse off in the year ahead, but confidence continues to remain polarised.
“Concerns surrounding inflation are to be expected but it’s reassuring to see that the rise in COVID-19 cases and delayed lifting of restrictions hasn’t significantly impacted confidence levels, perhaps indicating that the UK population is ready to move forward into the post-pandemic world,” Simon Wainwright, Director of Global Insight at IGD, said.
Predicting inflationary pressures are likely to intensify over the summer, CGA and Prestige’s latest Foodservice Price Index saw food and drink prices continue their upward trend in May, with basket costs up by 2.5% in April.
High demand and severe shortages of labour across food manufacturing, agriculture, warehousing, wholesale distribution and hospitality have led many firms to raise pay levels, which can be expected to feed through into prices in the months ahead, the companies said.
A combination of pandemic and Brexit-related impacts are also causing issues at major ports, slowing down food and drink imports and generating stock-outs in suppliers.
Shaun Allen, CEO of Prestige Purchasing said: “The reopening of hospitality on 17 May proved much more challenging than many suppliers and operators anticipated. Some suppliers have even made decisions to suppress demand by raising minimum order levels and de-selecting some customers. With the sector still to fully reopen after lockdown we expect food and drink supply to be challenging, and inflation to strengthen.”
Leonie-Jade Leigh, client manager at CGA, added: “While it has been great to see hospitality venues opening their doors again, rising food and labour costs and COVID restrictions have created tough market conditions. Supply challenges will hopefully start to ease as we settle into a new normal of trading. But these figures are another reminder that the sector’s crisis is far from over, and businesses need and deserve sustained financial support from [the] government in the months ahead.”