Some relief in Scots’ sales from seasonal events
OVERALL inflation for the year to the end of February rose by 3.7%, marking a decrease of 0.2% from this figure at the end of January.
According to the Office for National Statistics (ONS), the consumer price index including owner occupiers’ housing costs – CPIH – experienced an overall decrease of 0.2 percentage points from January after a downward contribution from clothing and footwear products as well as household costs.
From the end of January, household costs fell by 0.5%, whilst clothing and footwear saw a large dip of 2.4% and saw costs in the division fall by 0.6% in the weeks to the end of February. This marked the first negative annual rate for an inflationary figure since October 2021.
While there were no large, offsetting contributions to counteract this, alcohol and tobacco products did see an upwards contribution of 5.7% in the year to February, up from January’s 4.9% figure. This also comes before the annual duty increase across tobacco products, which is set to take place in April.
Meanwhile, food and non-alcoholic beverages saw no change between the end of January and the end of February and remained at a consistent 3.3%. The ONS said this was down to the fact that increases and decreases in prices for different food categories offset each other leading to no overall change in the rate.
This slight dip in inflation comes as the UK Chancellor Rachel Reeves is set to make a ‘Spring Statement’ at 12:30pm on 26 March and is expected to introduce cuts to welfare benefits. This comes after the industry-wide concerns that the Autumn Statement will negatively impact small businesses across Scotland.
Balwinder Dhoot, director of industry growth and sustainability at the Food & Drink Federation, urged the Chancellor to support food and drink manufacturers further through the ‘Spring Statement’ as business confidence for the sector has crashed down to a concerning -47%.
Dhoot said: “Manufacturers are grappling with rising energy and commodities prices, alongside the impact of looming government policies, such as rising Employers’ National Insurance Contributions and the upcoming EPR packaging tax.
“In short, doing business in the UK is becoming increasingly expensive.
“As food and drink manufacturers continue to work hard to minimise price rises for consumers, we hope to see the Chancellor make some bold decisions in her Spring Statement to bring business costs down, help curb this inflationary trend and revive growth.”
Similarly, the British Retail Consortium (BRC) has warned that, as a result of the Autumn Statement, food inflation is set to soar once again.
Kris Hamer, director of insight at the BRC, said: “Food inflation has jumped significantly in recent months and is forecast to hit 5% by the end of 2025 as a result of the costs arising from the budget.
“On top of this, retailers are still burdened by an outdated business rates system. It is vital that the government’s reform of business rates doesn’t impose additional costs on to retailers.”
Despite this, overall retail trading still remained buoyant during the four weeks to 23 February with some seasonal events, including Valentine’s Day, helping to boost up overall sales in Scotland.
During the time period, take-home sales in Scotland rose by 7.3% as Valentine’s Day supported some sales in the off-trade as champagne and sparking wine rose by 14% and 5.1% in volume sales respectively. However, this was not enough to counterbalance the overall decline in the category of 4% in value as Kantar said the MUP continues to influence shopper purchasing behaviour.
Stormy weather also had its impact as well and plenty of Scots started reaching out for more warming, comfort foods as a result. Hot pies and sausage rolls increased in value by 19.6% and 24.1% respectively.
Lesley-Ann Gray, strategic insight director at Kantar, said: “Trading was significantly impacted by Storm Eowyn, the most severe storm Scotland has experienced in over a decade, which forced many retailers to close stores to prioritise safety of staff and shoppers, resulting in a full day of lost sales.
“Online grocery sales saw the strongest percentage growth of any channel, rising by 12.5% year-on-year, with nearly 123,000 additional shoppers using the channel during this four week period.
“Own-label products remained a standout performer, growing faster than brands. Premium own-label ranges are driving this trend, up 14.7% in value versus last year.
“Tesco Finest and Sainsbury’s Taste the Difference are leading the charge, with Sainsbury’s boasting the highest proportion of premium own label sales, making up 19% of its total own label offering.”
