Grocery prices up on €2.72bn spend

Inflation appears to be re-emerging as a feature of Irish grocery shopping and bringing to an end a long period when consumers benefitted from the slide in the value of sterling against the euro since the Brexit referendum in the summer of 2016.

Prices of 30,000 grocery items bought by 5,000 households in January rose by 1.7%, up from a rate of 1.5% during the main Christmas period. Prices increased at their fastest rate since September 2016, when prices rose at 2.1%, according to market researcher Kantar Worldpanel.

Grocery price inflation in the Republic had fallen until recent months helped by the strong euro. Many grocery items are imported from Britain and therefore tend to be cheaper when sterling falls.

The latest prices as tracked by Kantar may suggest the positive effect for consumers in the Republic from the 15% slide in the value of sterling has come to an end.

The official Consumer Price Index, which measures all prices across the economy, rose by an annual rate of 0.7% in December.

Kantar’s latest survey also shows that shoppers in the Republic spent over €2.72bn at supermarkets in the 12 weeks through January 28, an increase of 3.4% from a year earlier.

Last month, Kantar figures showed the five largest supermarkets tapped the lion’s share of the €10.85bn spent last year on groceries, an increase of 2.8% from 2017.

The latest January figures show that Aldi, Lidl, and Dunnes increased their market shares in the year, with the German discounters boosting their shares the most.

At 23.1%, Dunnes, which was the largest grocer by the amount spent over Christmas, also had the largest share of the €2.72bn spent in the latest 12-weeks period.

It beat Tesco, with a share of 22.1%, and SuperValu which posted a share 21.6%.

Growth spurts boosted Aldi’s share of grocery spend in the latest period to 10.9% and Lidl’s to 10.6%.

“Both retailers achieved record market share over Christmas and that strong performance has continued into the new year,” said, consumer insight director Douglas Faughnan.

Meanwhile, business group Retail Ireland said all sales grew at a “slow but steady” rate during the Christmas quarter but warned 2019 would be “challenging”.

Online sales had led to a fall in footfall and retailers’ margins had fallen, director Thomas Burke said.

“2019 is likely to be a challenging year for the Irish retail sector, with ongoing structural shifts requiring the industry to rethink its traditional approach,” he said.

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