Report Summary

Period covered: 27 October – 23 November 2024

3 minute read

Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30 day membership trial now.

Food & Grocery Sales

Food & Grocery sales rose by xx% rise in November, against xx% growth in the previous year, according to the Retail Economics Retail Sales Index (value, non-seasonally adjusted).

Several factors impacted this performance:

Seasonal boost: Food was the only retail category to post annual growth, outpacing Non-food for the first time since August. Growth was driven by Halloween and early festive preparations. Food is also less exposed to Black Friday sales distortions, with the sales event falling into December’s trading period this year.

Promotional activity: The share of sales purchased on promotion hit nearly a third, the highest since last Christmas, as shoppers look to stretch their essential budgets.

Cautious spending: The flight to promotions comes as households continue to grapple with higher living costs, elevated interest rates, and soft real wage growth at xx%.

Stabilising inflation: Although food inflation edged up in November, it remains well below double-digit price rises a year ago, which is contributing to tough annual comparisons in value terms.

The Reeves squeeze

There are fears factors such as poor harvests and high energy costs will place upwards pressure on food inflation during 2025. However, uncertainty remains over how grocers will react to the Autumn Budget.

The Budget is set to add £7bn in operating expenses in 2025 amid increases in NIC, the minimum wage, and a new packaging levy.

Retail leaders such as Asda, M&S and Sainsbury's have spoken out against this. In December, retail representatives met chancellor Rachel Reeves to outline concerns over the extra costs imposed. While Reeves acknowledged challenges, including price rises and lower investment, it was indicated the government would stick to the Budget.

However, Iceland Foods managing director Richard Walker advised businesses to adapt, emphasising long-term solutions like skills development and industrial strategy.

The Bank of England warned of potential unemployment following the Autumn Budget, but said long-term profitability is expected to recover following a period of adjustment.

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