Bleak times ahead for sector, says new research

Bleak times ahead for sector, says new researchCost pressures for commodities and oil are continuing to fuel high inflation in the food and grocery sector, according to market research firm Verdict.

While supermarkets are able to absorb some price increases, inflation is inevitable, says Verdict, with volume growth expected to remain worryingly low.

“The outlook for the UK economy remains decidedly bleak, with 2013 set to be a further year of austerity, high inflation and low wage growth,” says Andrew Stevens, retail analyst at Verdict Research. “With this in mind, it is not surprising that volume growth in food and grocery will be just 0.2 per cent in 2013. With increased prices instore, shoppers will have very little room to buy more as many struggle to keep up with inflation.”

What’s more, global food prices look set to continue to rise next year, adds Stevens, with increases in grain prices having a knock-on effect on wheat, meat and dairy. Also, rising fuel prices will continue to exert an upward pressure on supply chain and logistics costs.

“Next year will be a difficult one for suppliers, but retailers and consumers will continue to feel increased inflationary pressures too,” concludes Stevens. “With the global food supply set to remain volatile, we expect this to continue in the future.”

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