Food sales ‘normalising’ despite deflation

Total food sales grew 0.5% for the three months to May, according to the British Retail Consortium (BRC) sales monitor.

While this is an improvement, it is still behind non-food growth, up 2.8% for the same period.

By 2020, grocery research company IGD forecasts predict that the food sector will see double digit growth in sales with a 13% increase.

David McCorquodale, head of retail at KPMG, which publishes the sales monitor research with the BRC, said: “The slight improvement in the three-month average food sales reflect the grocer’s relentless grind for growth and encouragement can be drawn from that.  However, as highlighted by the decline on a like-for-like basis, this recovery continues in the eye of a price deflation storm which continues to benefit the consumer.”

Joanne Denney-Finch, chief executive of IGD, added: “Although the May food sales figures were only a slight improvement on last year there are some positive signs for food companies. After a prolonged period of food and drink deflation, any growth is a solid achievement, especially given the wet and cool weather in May.

“If OBR expectations of slowly returning inflation are correct, this should give a modest boost to sales over the medium term and with a steady rise in population, our latest market forecasts predict 13 per cent sales growth for the sector between now and 2020.”

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