High inflation in the food and grocery sector in the UK is set to continue throughout 2018, due to poor weather conditions and the newly implemented sugar tax, according to data analytics company GlobalData.
Thomas Brereton, a retail analyst with the company, commented, "Despite overall retail inflation falling 0.3ppts from 2017 to 1.6% in 2018, food & grocery inflation will remain significantly higher and down only 0.1ppts to 2.7% over the same period.
"The arrival of the sugar tax in April was particularly influential in impeding any inflation decline, driving soft drinks inflation to 3.5% in Q2 2018 – up 2.3ppts on Q2 2017."
Poor Harvests
Warm and wet weather created by weather system La Niña throughout the US and South America will result in diminished harvests in coffee, cocoa, and grains, which will impact the bakery, cereals, and hot drinks sectors.
Brereton said that the comparatively higher inflation in the food and grocery sector will make up an increasing share of the overall retail market through to 2023, increasing its share by 1.0 percentage points to 44.8%.
This increase will force consumers to spend more on food staples, causing total food and grocery spend to rise by 13.1%(£19.1 billion) between 2018 and 2023.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.
