European grocery prices rise at slowest pace in five years

Kasmira Jefford
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Competition among the supermarkets has driven prices of everyday products lower (Source: Getty)

The price of everyday products sold across Europe is rising at its slowest pace in well over five years as fierce competition among the grocers rages on, according to the latest data by research giant Nielsen.

The data firm said that sales volumes of fast-moving consumer goods (FMCG), such as soft drinks, toiletries and food, rose by 0.8 per cent in the fourth quarter of last year, marking the seventh consecutive quarter of growth.

However sales values rose just 1.3 per cent, which was the lowest increase since the third quarter of 2010, when they rose by 1.1 per cent. As a result retailers saw a 2.1 per cent increase in their takings at the till.

“Sales values are being kept in check by a combination of things,” said Nielsen’s European director of retail insights Jean-Jacques Vandenheede.

“Production costs are falling thanks to lower oil prices, and retailers are still employing heavy promotional activity to combat the increased popularity of the discounters. Furthermore, almost three in ten Europeans are switching to cheaper grocery brands to save money," he added.

Prices fell sharpest in Switzerland and Portugal, down 1.6 per cent and 1.3 per cent respectively. A further four markets – Finland, Ireland, Germany and the Czech Republic – also experienced value deflation.

Of the big five western European markets, Spain had the highest nominal growth at 2.7 per cent, followed by Germany and France, which were up 1.5 per cent.

The UK was one of only four European countries to suffer a decline in sales values, down 0.5 per cent.

Separate retail figures from industry analysts IMRG and Capgemini released yesterday show a 15 per cent jump in online sales growth in January. This was more than double the seven per cent sales rise recorded in January last year, when November's Black Friday sales frenzy was blamed for a slowdown in demand after Christmas.

Online sales of both clothing and electrical good rose by 15 per cent year-on-year – the highest annual growth for the electrical sector since November 2014. Travel also performed well, with sale up by 11 per cent on the same time last year.

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