Food prices push grocery sales up as others dip

Published on Tuesday 22 July 2008 21:15

SCOTTISH shoppers are spending more on food as inflation drives up the cost of groceries, figures today revealed.

In June, food sales grew higher than any other retail sector in Scotland, while sales of nearly everything else fell in the worst decline for two and a half years.

The Scottish Retail Consortium said cash-strapped shoppers were spending more money on the same amount of food.

Director Fiona Moriarty said: "June sales is a story of two contrasting sectors. All the overall growth came from food sales which experienced their strongest growth for over a year.

"But that was largely explained by higher commodity costs pushing up prices and cash-strapped customers responding favourably to promotions.

"The real retail picture is overall sales growth not even matching inflation and non-food retailers suffering their worst sales decline for two and a half years, despite heavy discounting."

According to the SRC report, food price inflation is sitting at 7 per cent on an annualised basis, easily outpacing the official consumer price inflation of 3.3 per cent.

Overall like-for-like sales in June were 2.1 per cent higher than the same time last year, when they rose 1.8 per cent. Total sales in June were 7.8 per cent up on last year.

Non-food sales were 1 per cent lower than one year ago, the worst decline since January 2006. Sales growth in Scotland was stronger than the UK as a whole where sales fell 0.4 per cent below their June 2007 level.

The SRC said the retail market was "very difficult to interpret" because of considerable volatility.

Some large firms are growing strongly while other medium-sized businesses find conditions difficult, it added.

The report pointed to a "very tough month" for furniture and floor coverings and "difficult" sales in DIY.