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Food sales boosted by warm weather and supermarket price war

Published 11/10/2016

Grocery sales rose at their fastest pace since 2013 in the three months to September as supermarket price wars and an Indian summer gave food retailers a boost.

The latest British Retail Consortium-KPMG survey showed food sales rose 1.6% between July and September compared with the same period last year, which is three times the average 12-month rate of 0.5%.

"It was yet another month of positive growth for the grocers. Late summer temperatures combined with shoppers continuing to benefit from the ongoing price war has meant food and drink sales have been in the black for a full quarter - undoubtedly welcome news for the sector," said Paul Martin, head of retail at KPMG.

Major UK supermarkets have recently embarked on a fresh round of price cuts in a bid to win back market share amid competition from German upstarts Aldi and Lidl.

Meanwhile, warm weather factors that boosted grocer sales hurt fashion retailers.

The rise in mercury helped drag down non-food sales, which only grew 0.5% over the past three months, compared with the 12-month average growth rate of 1.3%.

Overall, total UK retail sales grew 1%, which is only slightly ahead of the 0.9% average over the past 12 months, and marks the weakest 12-month growth average since BRC-KPMG records began in 1995.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Today's figures show a return to sales growth, primarily driven by stronger food sales which saw their highest increase since November 2013.

"On the flip side, sales growth of non-food items remained sluggish. Despite a flurry of back-to-school purchases, clothing sales in particular had a more challenging month."

That is despite a rebound in consumer confidence, which returned to pre-Brexit levels in September, according to the latest GfK survey. The GfK consumer confidence index rose six points last month, its fastest rate since July 2015.

Ms Dickinson warned that retailers are starting to struggle against economic headwinds, with the drop in sterling threatening to raise import costs.

"Against the current backdrop of intense competition and transformational change in the industry, it's crucial that retailers are able to continue their excellent track record of keeping prices low for their customers and offering great choice and value.

"With that in mind the BRC will be ensuring that in the forthcoming Brexit talks, Government negotiators have their sights set firmly on lowering import costs as well as avoiding any increase in tariff costs as the UK leaves the EU."

Press Association

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