"Shrinkflation” and “skimpflation” emerged as the main scourges of supermarket shoppers in 2023, a recent report has shown.
According to a report by Barclays combining hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending, 76 per cent of consumers had noticed examples of shrinkflation in September, with chocolate (48 per cent), crisps (41 per cent), packs of biscuits (38 per cent) and snack bars (31 per cent) the most cited products impacted by this trend.
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 per cent) 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 (70 per cent) claimed to be looking for cutbacks – over half (53 per cent) 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.
Pharmacy, health & beauty retailers also enjoyed an uplift this year (5.6 per cent) – 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, stated the report.
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.
Esme Harwood, Director at Barclays, said, “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.
“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, “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.”
