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Sancho Panza

First Fall In Food Spending For 25 Years

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i 21/8/14

'Britain is in the midst of a supermarket price war that has so far taken the scalps of Tesco’s chief executive and finance director, ended Sainsbury’s unprecedented nine years of sales growth, and seen Morrisons suffer some of the biggest sales falls in living memory.

The war is so fierce, the Office for National Statistics (ONS) yesterday revealed the first fall in spending by shoppers year on year since records began 25 years ago and a low level of retail price inflation.

The average price of goods in grocers was 0.2 per cent higher than a year ago – the lowest rise since 2004 – and the average price in July was 0.9 per cent lower than 2013. On Tuesday the consumer prices index, one measure of UK inflation, fell to 1.6 per cent from 1.9 per cent a month earlier.

The British Retail Consortium (BRC) also reported recently that, on its own measures, like-for-like food sales were down 3.5 per cent – the worst performance since 2008. Meanwhile food inflation was just 0.3 per cent, also the lowest rate since records began.

Price wars are nothing new to the grocery sector and the cuts rarely affect inflation, raising the question of what is different this time round.

Many have suggested that the rise and rise of the German discounters Aldi and Lidl is the key factor – stealing customers away from the Big Four of Tesco, Sainsbury’s, Asda and Morrisons.

But could other factors be at play?

Jon Copestake, a retail analyst at the Economist Intelligence Unit, explained: “The big difference between this and previous price wars is that this one is almost exclusively being driven by mid-market retailers seeking to offset the growing prevalence of discount retailers.

“Another factor that distinguishes this price war is that is it not product specific; stores appear to be embarking on cuts across a number of lines to win back footfall, rather than develop a few loss leaders for marketing purposes.”


“The grocery sector works on wafer-thin margins, so the cost of wheat, corn, oil, rice and meat is arguably more important when it comes to setting prices than whether the discounters are winning customers.”

That is not to suggest that the discounters are not playing their part, with the Big Four all agreeing that there is a threat from other European countries, such as Germany, where discounters are the market leaders.

However, Mr Lim said: “One structural change in the market is the discounters, but it’s important to put into context that they only control about 8 per cent of the market. They are growing very quickly, but 92 per cent of grocery shopping happens outside that market.

“In a historical context, it’s also worth remembering that discounters had a bigger market share in 1995, with Kwik Save in the region of about 11 per cent.”

Other factors are also at play, with internet and convenience store shopping across different grocers leaving fewer households doing one big weekly shop, while families are also learning to throw away less food.

So whether it is commodity prices stabilising, discounters flooding the market, or shoppers changing their habits, it seems safe to say most people will enjoy lower prices.

But the warning implicit in yesterday’s ONS figures is that there are some drawbacks to cheaper bananas, carrots and milk. The price war has led Tesco to consider a dividend cut, and with most pension funds tied up in the stock market, continuing falls in profits could ultimately hit us all.'

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It doesn't take a genius to work out that stagnant wages and RISING shop prices (1.6%) are going to result in reduced sale volumes. Especially now we have reached peak debt and the payment can no longer be deferred to credit cards, MEW and loans.

I al also sceptical about the stories of millions of immigrants flooding in and suspect that many of our European neighbours have returned home thus reducing demand at the checkout.

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the rise and rise of the German discounters Aldi and Lidl

Trade wars.

Germans (& Japs) did the same to Britains cr4p car industry. Now they're taking the cr4p food retailers out.

Whenever Britains City of London driven corporates face the tiniest bit of competition they crumble.

Edited by R K

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Report out this morning that doctors are seeing malnutrition.

I had a conversation with two EAs yesterday about why people are not buying things and cutting back on food... and pointed out that houses were so expensive that people had sod all money left over for spending.

On Fivelive this morning they had a chap on who pointed out that wage growth is non-existent outside of the City but when a group of people do manage to get a wage rise it often results in their organisation cutting back on staff... so wage rises now equal reductions in the workforce.

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Jesus Christ. When this all blows up the mess is just going to be gigantic.

Massive crash coming. The crash to end all crashes.

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It doesn't take a genius to work out that stagnant wages and RISING shop prices (1.6%) are going to result in reduced sale volumes. Especially now we have reached peak debt and the payment can no longer be deferred to credit cards, MEW and loans.

I al also sceptical about the stories of millions of immigrants flooding in and suspect that many of our European neighbours have returned home thus reducing demand at the checkout.

It doesn't take a genius to work out that there are too many Fat B***** around and their families. Food spending could fall by half and we would still all be healthy

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Families are learning to throw away less food.

Eating more, wasting less.

Big supermarkets need to learn from them....

Sorry winkie didn't read the whole thing you put it so politely.....

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It doesn't take a genius to work out that there are too many Fat B***** around and their families. Food spending could fall by half and we would still all be healthy

Some would likely be healthier. Others may end up suffering malnutrition.

*imagines a utopia where the fatties with too much food give the excess to those with too little and everyone is happy and healthy* :)

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Some would likely be healthier. Others may end up suffering malnutrition.

*imagines a utopia where the fatties with too much food give the excess to those with too little and everyone is happy and healthy* :)

Food that makes you fat is cheaper food, the mainly white foods full of carbohydrates and sugars......the main reason there is a growth in the way of fat and obese people is because more people are not exercising enough....many reasons for that, starts in the schools in the way of less time dedicated to PE/sports lessons, people not walking enough, exercising enough regularly, sitting down for long periods of time in front of TV and computers, desk jobs....kids gaming and interacting in a social way over the pc and podpads instead of down the park or in competitive sports. ;)

Edited by winkie

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Food spending is down but rents and utilities at an all time high.

Difficult choices.....eat more to keep warm...walk around the shopping centre, ride full cycle on the bus, sit for an hour or two in the corner of the cafe ......go back later to a cold shared pad with a warm blanket/quilt and a hot cup of tea. ;)

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My total food purchases in the last month have been 4 loaves of bread, 28 bananas and 28 Apples and 2 pints of cream.

I'm doing my bit.

Edited to add: & a bottle of cider :-)

Edited by LiveinHope

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Some would likely be healthier. Others may end up suffering malnutrition.

*imagines a utopia where the fatties with too much food give the excess to those with too little and everyone is happy and healthy* :)

Trouble is you would have to prise it out of their chubby fat paws - whilst listening to their its my right innit entitlement chav voice

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Trouble is you would have to prise it out of their chubby fat paws - whilst listening to their its my right innit entitlement chav voice

I would rather eat my own vomit than something you had touched.

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Look, my debatable Ice cream theory - people can't afford the expensive ice cream and it is left to frost up

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PIC_0003.JPG

Edited by 200p

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Iphones are not cheap ?

No seriously I have noticed that alot at my work have taken overseas holidays this year in July and August so if that is more commonplace I would expect this is distorting the food numbers.

Christmas is coming so a chance to restock. They (the retailers) always cry wolf and then report another bumper year.

Edited by Ash4781

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