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Tuesday, 2 August 2011

Squeezed Shoppers Switch To Budget Supermarket Own-Label Products

* Even cheaper brands soaring in price

* Grocery inflation will only get worse

Struggling shoppers are switching to budget food stores and supermarket own-label products in an attempt to economise, research revealed yesterday.

At the same time, one in three families is cutting back on food, including fruit and vegetables and organic food, amid the biggest squeeze on living standards in generations.

Market researchers Mintel found four in five had changed their food shopping habits as a direct result of rising prices.

But a study by consumer group Which? showed that 34 per cent still had to cut back on food and groceries.

Thirty-eight per cent said they were less likely to buy organic meat, while 43 per cent were cutting back on organic fruit and vegetables, it found.

Retail giants Tesco, Asda, Sainsbury’s and Morrisons claim they are protecting shoppers from the impact of rising commodity prices by offering promotions.

However figures compiled for the Daily Mail by the shopping site mySupermarket show startling price rises on staple foods at the ‘big four’ supermarkets, including on their own-label products.

Sainsbury’s corn flakes are up 37 per cent and its iceberg lettuce will set shoppers back 18 per cent more than it did this time last year, the research revealed.

Tesco’s own-label butter will cost shoppers 25 per cent more now, and the price of cauliflower sold in its stores is up by 15 per cent.

James Foord, of mySupermarket, said: ‘In the past year alone, shoppers have been subject to double-digit price hikes to the contents of their shopping trolley.

‘It is imperative consumers shop around for the best deals. Savvy shoppers can switch to cheaper budget products and supermarket own labels to make their budgets stretch.

Eighty-four per cent of shoppers are seriously worried about rising food costs, according to Which? It found that 39 per cent of consumers are now using discount supermarkets more often.

Budget grocer Aldi has seen a 20.2 per cent increase in sales compared with a year ago, while Lidl is up 15.6 per cent.

Richard Lloyd, Which? executive director, said: ‘People are feeling the squeeze from soaring food prices.

‘They are changing their behaviour and becoming more savvy shoppers when it comes to groceries, but there’s only so much they can do to cut back on the basics.’

Researchers Mintel said ‘brand loyalty is typically the first casualty’, adding: ‘Despite a heavyweight promotional culture in the UK, three quarters of consumers are more concerned about rising food prices than they were a year ago.

‘And the situation is about to worsen amid warnings of higher prices to come.’

The volume of food and grocery sales is down by 1.7 per cent compared with a year ago, according to retail analyst Nielsen.

Mike Watkins, its senior manager for retailer services, said: ‘Inflation is dampening demand and retailers are seeing falling unit sales as shoppers continue to struggle not only with food costs but with rising fuel prices and utility bills as well.’

The annual rate of price increase for all types of food hit 4.9 per cent in May, driven by a surge in the cost of commodity crops such as wheat and corn. Wheat prices are up by 72 per cent in a year, pushing up the cost of supermarket own-label pasta and baguettes.

Droughts in many parts of Europe – including the UK – have exacerbated the problem by hitting yields of many food crops, says the British Retail Consortium.

And as bills rise, Asda’s monthly income tracker claims families were an average of £9 a week (or 5.1 per cent) worse off in June 2011 than they were a year ago.

This fall in spending power has been running for four years, making it the most prolonged squeeze on living standards since the 1870s, according to some analysts.

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