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​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 24 October​​​, 2016​​​​​​​​​​​​​​​​​​​​​

​Inflation rises and is forecast to rise further

Inflation, as measured by consumer price index, rose from 0.6% in August to 1% in September, its highest level since November 2014, exceeding the previous forecasts of 0.9%. According to the ONS, the rise was largely driven by energy prices, with there being as yet little evidence of any currency impact since the EU referendum vote. The rise points towards higher inflation in the coming months. At the same time, wage growth is slowing and rising prices are starting to eat into consumer’s purchasing power. That being said, despite the rising headline levels of inflation and weakened currency, deflation continues in the grocery sector; fuelled by price wars food prices fell 0.3% in September. Some respite, but currency fuelled inflation will also inevitably start to bite over the coming months.

According to Kantar Worldpanel, sales in the UK grocery market in the last quarter were 0.8% higher than a year ago. Kantar Worldpanel’s market share figures also show that the UK’s largest grocer, Tesco, has increased its market share for the first time since 2011. This was helped by a sales rise of 1.3% YoY in the 12 weeks to October 9. Tim Vallance, head of JLL UK Retail and Leisure, said: “The latest Kantar Worldpanel figures on grocery market share show that the big 4 are fighting back. Tesco’s recovery has been helped by a mixture of positive PR around "Marmite-gate" and the focus on development of new and popular brands like its ‘farm brands'. The grocery giants are waking up to the idea that shopping is now seamless: it's about obtaining goods, whether online or offline, through clicks or bricks, via multi or ‘omni-channel'. This will hopefully lead to greater technological and digital innovation in the sector, which can only be good news for the consumer and the growing online grocery business.”

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