Skip to content
Search
AI Powered
Latest Stories

Barclays: Rising food prices propel grocery growth in 2023

Barclays: Rising food prices propel grocery growth in 2023
iStock image
Getty Images/iStockphoto

Rising food prices propelled supermarket growth in 2023, while ‘shrinkflation’ and ‘skimpflation’ emerged as new challenges for grocery shoppers, card payments data from Barclays has revealed.

Consumer card spending increased just 4.1 per cent year-on-year in 2023, lower than the growth seen in 2022 (10.6%), as Brits cut back on new clothes, eating out and home improvements amid rising inflation and household bills.


However, consumers continued to prioritise moments of joy and shared experiences, boosting travel, entertainment, and pubs & bars, Barclays said in a shoppers trends report.

The data reveals that spending on essential items grew 3.9 per cent in 2023 compared to 6.3 per cent last year, largely due to a 10.7 per cent drop in fuel spend, stemming from the decline in pump prices this year after they peaked following Russia’s invasion of Ukraine in early 2022.

Rising food price inflation fuelled a 6.5 per cent increase in supermarket shopping, while food and drink specialist stores returned to growth (4.4%) following a 1.1 per cent decline last year.

Discount supermarkets performed particularly well, accounting for 15.5 per cent of all grocery spending – an all-time high, up from 14.5 per cent in 2022 – as savvy shoppers looked for ways to reduce the cost of their weekly shop amid rising prices.

This behaviour peaked in September, when seven in 10 claimed to be looking for cutbacks – over half (53%) of these consumes were paying closer attention to price rises on specific items, 49 per cent were buying budget or own brand goods over branded goods, and the same proportion (49 per cent) were opting for more budget or value ranges

‘Shrinkflation’ and ‘skimpflation’ emerged as the main scourges of supermarket shoppers in 2023. ​At its peak in September, 76 per cent of consumers had noticed examples of shrinkflation, with chocolate (48%), crisps (41%), packs of biscuits (38%) and snack bars (31%) the most cited products impacted by this trend.

In addition, more than one in five Brits (22%) in July noticed that shrinkflation was also affecting alcoholic drinks, finding that some of the drinks they were buying – such as beers, spirits and tinned cocktails – were becoming weaker or containing less alcohol, yet still costing the same or more.

Meanwhile, over half (52%) of shoppers in August noticed that some of the food and drink products they were buying had been downgraded in terms of the quality or quantity of premium ingredients, yet still cost the same or more than they used to – otherwise known as ‘skimpflation’. These shoppers had mostly noticed the declining quality of clothing, chosen by 44 per cent, closely followed by toilet paper (43%), and toiletries/cosmetics (37%).

To offset rising household bills, Brits spent less on eating out in 2023, with restaurants seeing a 6.7 per cent decline compared to last year. This comes as almost half (47%) of consumers in October said they were planning to cut down on discretionary spending so they could afford their energy bills throughout the autumn and winter, with eating out at restaurants (56%) one of the most cited areas for cutbacks.

On the other hand, pubs, bars & clubs had a strong 12 months, up 5.9 per cent year-on-year. This growth was largely driven by major public and sporting events, including the King’s Coronation and Rugby World Cup, as well as rising beer and alcohol prices. The strong performance of pubs compared to restaurants also suggests that while out socialising Brits were opting for more affordable pub food instead of formal restaurant meals.

Pharmacy, health & beauty retailers also enjoyed an uplift this year (5.6%) – possibly thanks to the ‘lipstick effect’, where consumers prioritise small indulgences, such as cosmetics and self-care products, over big-ticket items during periods of economic uncertainty. The category’s boost is also likely due to pre-holiday purchases as well as increased demand for make-up and skincare compared to last year, when the pandemic’s lingering effects meant fewer Brits commuted into the office, reducing the need for appearance-related investments.

Despite inflationary pressures, Brits have been keen to spend on memorable experiences. The entertainment sector (up 7.5%) was boosted by the release of ticket sales for major events including the Eurovision Song Contest, Taylor Swift’s ‘Eras’ tour, and Beyoncé’s ‘Renaissance’ tour, with spending on shows and concerts up 8.6 per cent year-on-year overall. Meanwhile, blockbuster hits including Barbie, Oppenheimer and Avatar: The Way of Water fuelled a 6.3 per cent increase at cinemas. ​

At-home experiences – or 'insperiences' – proved popular, with digital content and subscriptions as well as takeaways and fast food rising 7.3 per cent and 8.1 per cent respectively year-on-year.

Rising costs combined with inconsistent weather meant clothing stores had a challenging year, declining 0.5 per cent. Home improvements & DIY saw a 4.7 per cent decline year-on-year, while furniture stores saw a similar drop (-5.2%), indicating that Brits have been making fewer big-ticket purchases and instead prioritising their spend in more experience-led categories.

“Brits prioritised memorable experiences and shared moments with loved ones this year, boosting pubs, travel and entertainment. Many were keen to make up for lost opportunities during the pandemic by booking holidays, treating themselves to concert tickets, and enjoying nights out with friends,” Esme Harwood, director at Barclays, commented.

“However, certain sectors saw noticeable cutbacks. Restaurants and clothing stores were hampered by the unpredictable weather, as well as the impact of rising household bills on consumers’ personal finances. Nonetheless, Brits' confidence in their ability to spend within their means has remained resilient, as they become more resourceful and adept in finding ways to balance their budgets.”

Jack Meaning, chief UK economist at Barclays, added: “Although 2024 will be a tough year for the economy as a whole, the New Year is a time to look for the positives. We expect to see the Bank of England start easing interest rates from the middle of the year, and in fact, we’re already seeing mortgage rates come down in anticipation. This is as the speed of price rises slows, which should continue to provide at least some boost to the spending power of people who have been squeezed through the cost-of-living crisis. 2024 will be a year of transition, from headwinds to tailwinds, but come next December we should be able to toast the New Year with more festive spirit.”

More for you

Volumatic welcomes new FCA rules safeguarding access to cash

Volumatic welcomes new FCA rules safeguarding access to cash

As industry leaders is cash handling, Volumatic has long supported the use of cash and the importance of maintaining access to cash for both consumers and businesses. The company recognises the importance of the new set of rules created by the Financial Conduct Authority (FCA) two months ago, to safeguard access to cash for businesses and consumers across the UK.

Since introduction, the new rules are intended to ensure that individuals and businesses who rely on cash can continue to access it and the outcome has already sparked the creation of 15 new banking hubs across the UK, including one in Scotland, with many more to follow.

Keep ReadingShow less
Jisp unveils new NPD service

Jisp unveils new NPD service

Retail technology company Jisp has launched an NPD service as part of its new Direct to Retailer business unit.

The new NPD service will allow brands to launch or trial new products in a guaranteed number of convenience store locations, with on the ground review of execution by Jisp’s retail growth manager team, and performance data and insights deliverable through its scanning technology and back-office systems.

Keep ReadingShow less
Tesco launches price cuts in Express convenience stores
File image of Tesco Express

Tesco launches price cuts in Express convenience stores

Tesco is slashing the price of more than 222 own-brand and branded products in its Express convenience stores.

Essentials including milk, bread, pasta and coffee are included in the lines which have been reduced in price by an average of more than 10 per cent at Tesco Express stores. The retail giant has made more than 2,800 price cuts across stores in recent months. With 2,048 of convenience stores at the end of the 2023-24 financial year, Tesco aims to benefit hundreds of thousands of customers from the cheaper deals.

Keep ReadingShow less
vape and cigarette
Photo: iStock

One in five ex-smokers in England now vape, study finds


Summary
1. One in five people who have successfully quit smoking in England currently vape, with an estimated 2.2 million individuals using e-cigarettes as a smoking cessation tool.
2. The increase in vaping among ex-smokers is largely driven by the use of e-cigarettes in quit attempts, with a rise in vaping uptake among people who had previously quit smoking for many years before taking up vaping.
3. While vaping may be a less harmful option compared to smoking, there are concerns about the potential long-term implications of vaping on relapse risk and nicotine addiction. Further research is needed to assess the impact of vaping on smoking cessation outcomes.


Keep ReadingShow less
Bira engages with Treasury on Budget fallout, business rate reform
(Photo by Christopher Furlong/Getty Images)
Getty Images

Bira engages with Treasury on Budget fallout, business rate reform

Independent retailers association Bira has held a meeting with members of the Treasury team to discuss concerns following its robust response to the Government’s recent Budget announcement.

The Budget, labelled by Bira as "devastating" for independent retailers, was met with widespread indignation from Bira members.

Keep ReadingShow less