Rising energy and fuel prices to affect festive-time spending

Rising energy and fuel prices may make Britons tighten their purse strings which could affect their spending in the run up to Christmas, suggests the latest data from analyst Nielsen.

NielsenIQ revealed today (19) that in the four weeks ending 9 October, grocery sales slowed to £11.8bn, which is 0.7 per cent down on the same period last year.

Despite this year-on-year fall, grocery spending is still 6.6 per cent up on pre-pandemic levels for the same period in 2019.

NielsenIQ also reveals that the proportion spent on promotional items remains low at 20 per cent, down from 22 per cent during the same period last year amid growing concerns around availability issues and disruption in the supply chain.

Owing to the widespread reports of expected shortage in the run-up to Christmas, UK households are also being encouraged to shop earlier ahead of the festive period – meaning they are not waiting for the start of seasonal promotions.

Mike Watkins, NielsenIQ’s UK head of retail and business insight, said that October will be a “tipping point for food retail spend”.

“This is down to a plethora of factors, including cautious consumer sentiment, increased concerns about discretionary spend, and ambient food inflation – which accelerated to 0.8 per cent in September and also ‘lockdown 2’ comparatives starting in November.

“This is likely to be reflected in top line growth continuing in the region of -1 per cent to +1 per cent. These trends will also give added momentum to value based retailing – with shoppers looking to spend less but still get good value for money.

“As a result, supermarkets may rely less on broad promotions and instead focus on driving loyalty via smart targeting of discounts and personalised price cuts, such as Tesco Clubcard and Nectar prices and if needed, the return of vouchering.”

Watkins added that availability concerns are still in shoppers’ minds, with customers worried about empty shelves this Christmas.