Households will have less in their basket but will pay more for it at supermarkets this Christmas, according to new data.
Based on new research, NielsenIQ forecast that consumers will spend £34bn at supermarkets over the festive period, a 4% jump on last year.
However, most of this growth will be driven by rising prices, with actual sales volumes expected to fall by 4%.
“With the cost of grocery shopping still rising, this is motivating shoppers to shop and buy differently,” said Mike Watkins, NielsenIQ UK head of retailer and business insight.
“With all of the big four supermarkets either giving extra price reductions or adding weekly vouchers to their loyalty schemes, this may prove the catalyst to help grow sales this Christmas.”
Nielsen found that Christmas shopping started earlier this year, with 30% of shoppers starting spending in mid-October compared to 18% last year.
Roughly 27% of shoppers also said they will buy Christmas gifts as and when they see them, “which suggests a spreading the cost of Christmas mindset is ever more important this year as budgets are stretched,” said Watkins.
All year-round supermarkets have raised concerns over cost inflation which has resulted in them hiking prices - though many food producers report that grocers are keeping most of the price rises to themselves.
The results of the industry’s big hitters, such as Tesco PLC (LSE:TSCO) and J Sainsbury PLC (LSE:SBRY), were not clear on how much rising prices were responsible for revenue growth.
Sainsbury’s recently said that grocery sales in the half year to mid September grew 0.2%, and claimed it was "consistently inflating behind the market, driven by more than £500mln investment over two years to keep prices low".
Tesco’s first half results also saw a jump in grocery sales of 3.1%, although it did say that adjusted operating profits fell due to cost inflation and “investment in the customer offer”, including “working relentlessly to keep the cost of the weekly shop as affordable as possible”.
Tesco boss Ken Murphy said the grocer's strategy was about “inflating a little bit less and a little bit later,” and had resulted in its price position getting more competitive in the first half.
However, consumers have traded down to discounters such as Aldi and Lidl, with the former replacing Morrisons as the fourth largest grocer in the UK, with data from Nielsen suggesting that the gap is getting bigger.
Aldi in the 12 weeks to 5 November reported sales growth of 4.5%, while Morrisons, alongside Waitrose, were the only two retailers to see sales decline when compared to the same period last year.