(Bloomberg) -- UK grocery price inflation rose in December as household spending over Christmas hit a record.
Supermarket prices increased 3.7% in the four weeks ended Dec. 29 compared with a year earlier, research company Kantar said in a statement Tuesday. That’s up from a 2.6% rise in the previous period and the highest since March. Overall sales at the grocers rose 2.1% in the period, it said.
Household spending on groceries hit a record over Christmas at £460 ($577) on average, Kantar said.
The data from the supermarkets contrasts with the initial picture from broader high street retailers. Separate figures from the British Retail Consortium and KPMG published Tuesday showed retail sales edged up 0.4% in the three months to December versus a year ago — a modest rise for a key period including Black Friday and Christmas.
“In contrast to reports of disappointing footfall across the rest of the high street, it was a very different story in the world of grocery,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
Britain’s biggest supermarket Tesco Plc was one of the main winners in the Christmas period, seeing 5% growth over the 12 weeks to 29 December, according to Kantar. Its market share edged up to 28.5%.
Sales at privately-owned Asda fell 5.8% over the same period, adding to months of declines at the ailing supermarket.
Still, overall retailers’ concerns are building about the impact of tax rises and the state of the economy. The BRC projects sales growth to average 1.2% this year, below its forecast for shop price inflation of 1.8%.
Earlier on Tuesday, Next Plc said there will be a slowdown in sales and profit over the coming year as tax hikes take their toll.
Retailers have been warning for weeks that tax rises in Chancellor of the Exchequer Rachel Reeves’ budget will stoke inflation and force them to pass costs onto consumers. The Labour government announced revenue-raising measures worth more than £40 billion ($50.2 billion) as it tries to fix the National Health Service and infrastructure, with higher payroll taxes the biggest component.
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