Growth in cost of a supermarket shop finally slows down, card spending data shows – but shrinkflation is here to stay

Increases in the cost of a supermarket store finally appear to be slowing as food price inflation eases, according to new data from Barclays.

Card spending at supermarkets grew 3.9 percent in the year to the end of February, according to the bank, compared with a 5.2 percent rise in January.

This was helped by the fact that food price inflation slowed to 7 percent in February, reaching its lowest level since April 2022.

Total card spending rose 1.9 percent over the year according to Barclays, the smallest annual increase since September 2022, when spending rose 1.8 percent. The figure is also well below the latest CPI inflation rate of 4.2 percent.

The bank said two-thirds of shoppers reported they were trying to cut costs on their weekly shop, while a quarter were turning to simple ingredients such as pasta, rice and vegetables to cook cheaper meals.

However, while prices at checkout seem to be dropping, so are product sizes. Of 2,000 shoppers surveyed by Barclays, 78 percent said they were worried about “counterinflation.”

This occurs when the size of a food item is reduced, but the price remains the same or increases.

Additionally, 63 percent said they wanted the government to take action to address product shrinkage, such as requiring manufacturers to display reduced content on packaging.

Meanwhile, more than half of shoppers have felt the impact of supply chain issues and have reported noticing supermarkets running out of stock during February.

Nearly a third said they were worried about a tea shortage, after reports that some stores are struggling to stock up on the product due to Houthi attacks on ships in the Red Sea.

Karen Johnson, retail director at Barclays, said: “In the supermarket, most shoppers have noticed the impact of supply issues on stock, with tea shortages causing the biggest concern.”

Another trend that bothered consumers in February was “drip pricing,” according to the research. This is when retailers impose additional fees at checkout when shopping online.

39 percent of shoppers reported this practice when ordering food online, as well as 32 percent when purchasing airline tickets and paying for live events.

Staying at home is the new way out.

However, sneaky charges did not stop consumers from spending money on takeaway services during February, with spending increasing 5 percent year-on-year as more people chose to enjoy nights in.

Events such as the Super Bowl and the Baftas and the success of television shows such as Netflix’s ‘One Day’ boosted digital subscriptions by 11.8 percent.

Unsurprisingly, as more shoppers decided to stay home, the past month was miserable for the hospitality sector.

In restaurants, card spending decreased by 13.4 percent, compared to 11.6 percent in January, while spending in bars, pubs and clubs was the lowest since September 2022.

Bad weather in February may also have dampened sentiment, Barclays said, as non-essential spending fell 1.7 percent and in-person retail sales and clothing spending fell 2.2 percent and 1. 0 percent each.

On the other hand, online shopping grew and the rainy month provided a 1.2 percent spending boost.

Johnson said: “February’s wet weather meant Brits chose to spend more time indoors, resulting in a slowdown in spending in hospitality and on high streets. This behavioral shift meant at-home experiences enjoyed a boost as consumers opted to enjoy cozy nights in with a TV show and takeout.

“As Brits have reined in discretionary spending over the winter months and inflation pressures begin to ease, retailers will be hopeful that the arrival of warmer weather will boost spending, especially if consumer confidence improves in the summer. “.