Euro 2024 beer price war helps grocery inflation fall below 2%

A rush of promotional activity to lure football fans to supermarkets has played a role in pushing grocery inflation to its lowest level since September 2021, according to industry data.

Kantar Worldpanel – which tracks supermarket till prices, sales and market share – said its measure of grocery inflation slowed to 1.6% in the four weeks to 7 July from 2.1% the previous month.

That left the figure at its lowest level since September 2021 and marked the 17th consecutive decline in the monthly rate following the peak seen in the months after Russia’s invasion of Ukraine.

Kantar said prices were rising fastest in markets such as vitamins/minerals/supplements and chilled fruit juices and still falling fastest in toilet rolls, butter and dog food categories.

Supermarket promotions to attract football fans during Euro 2024 – highlighted by last month’s report – sparked stronger competition between chains in areas such as beer and snacks.

Kantar said trips to the shop were 2% up over the four-week period compared with the same time last year, potentially boosted by fans of both England and Scotland stocking up for group games and, latterly, England’s quarter-final against Switzerland, which was the last match day for which data was available.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “England’s hopes might have been dashed on Sunday, but there was still some cause for celebration in the grocery industry.

“Football fans drove beer sales up by an average of 13% on the days that the England men’s team played, compared with the same day during the previous week.

“Sales of crisps and snacks also got a boost, up by 5% compared with the month before.”

“With many matches played on ‘school nights’, though, some Britons chose moderation. Spending on no and low-alcohol beer soared by 38% on match days.”

Promotional activity has often been credited by Kantar in the past for raising sales and slowing inflation, with Christmas seeing peak discount activity.

Additional data showed that 44% of alcohol sales were on promotion during the last four week period, suggesting that activity contributed to the easing in grocery inflation as alcohol typically accounts for 10% of all supermarket sales.

The main data was published just 24 hours before official inflation figures covering June are released.

Economists widely expect the consumer prices index measure to ease to 1.9% from 2% the previous month.

However, financial market opinion is split 50-50 on whether the Bank of England will see enough this week from the inflation data, followed soon after by employment figures, to allow for an eagerly awaited interest rate cut on 1 August.

Policymakers want to see more evidence that services inflation and the pace of wage growth are coming down.