Cheap food prices mean shoppers are saving about £400/year, while farmgate prices are continuing to fall.
The price of groceries fell 1.5% in the 12 weeks to 24 April – the 21st consecutive period of deflation since September 2014, according to market analyst Kantar Worldpanel.
Meanwhile, UK farmers continue to suffer with falling farmgate prices across nearly all sectors. Figures released by Defra last week showed total income from farming (Tiff) fell £1.5bn in 2015 compared with the year before.
Dairy, wheat, pig and sugar beet producers and growers were the worst hit – Tiff in the dairy sector fell by £931m, wheat by £432m, pigs by £186m, and sugar beet by £142m.
Discounters push down on market
Kantar attributed the fall in food prices to the impact of discounters Aldi and Lidl on the market and the supermarket price war that they triggered, alongside major commodity price deflation in categories such as pork and dairy.
See also: How discounters work with suppliers
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Consumers are enjoying a golden period of cheaper groceries with like-for-like prices falling every month since September 2014.
Consumers are enjoying a golden period of cheaper groceries with like-for-like prices falling every month since September 2014 Fraser McKevitt, Kantar Worldpanel
“Nearly two years of falling prices mean the average household is spending £78.10 a week in the supermarket, so consumers have annually saved more than £400 [compared to if] prices had risen at the same rate as the past decade.”
Supermarket sales hit too
The 12 weeks to 24 April show all the major supermarkets posting a decline in their rate of growth as sales increased by only 0.1% on this time last year.
Asda suffered the biggest decline in sales, falling 5.1%, while Aldi and Lidl continue to romp ahead with growth rates of 12.5% and 15.4% respectively.
Aldi’s market share is now just 0.2% behind that of the Co-operative supermarket.
Sainsbury’s is the only one of the “Big Four” to have retained its market share (16.5%) since this time last year, but its accounts posted on Wednesday (4 May) showed 14% fall in annual profits, which it blamed on falling food prices.