Proactive Investors - More on the cost of Christmas.
According to Kantar, shoppers will have to spend an extra £60 in December to buy the same items as last year.
Kantar's Fraser McKevitt said: "The cost of a traditional Christmas dinner for four has hit £31 in 2022, an example of just how much rising prices are impacting people at the tills and in their daily lives.”
Consumers are also leaving their seasonal purchases later this year as they try to manage budgets in the run up to Christmas Day. McKevitt said: “Sales of mince pies, Christmas puddings and Christmas confectionery are worth 2% more than last year, but this rise can largely be put down to higher prices. If we look at the amount of people buying these items and the overall number of purchases made, then sales are actually down on 2021."
8.22am: Grocery sales expected to hit a record of at least £12bn in December
Some positive signs from the supermarket sector with grocery price inflation dipping in November and sales increasing, while December is expected to be the biggest ever month for take home purchases.
According to the latest report from Kantar, grocery price inflation fell for the first time in nearly two years, albeit down by just 0.1 percentage points to a still hefty 14.6%.
Take home sales rose by 5.9% year on year in the 12 weeks to 27 November 2022, the fastest level of growth since March 2021.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “As we move into the busiest time of the year for supermarkets, there are signs that the pace of grocery price inflation is easing off slightly as we saw a small dip of 0.1 percentage points this month – the first drop in 21 months. Grocery inflation still has a long way to come down though and based on the current rate, shoppers will have to spend an extra £60 in December to buy the same items as last year."
There has been little impact from the men's World Cup on sales, according to McKevitt. He said: "“We haven’t seen a big World Cup effect – at least not yet. Take-home beer sales nudged up slightly in the last four weeks, covering the first week of the tournament, by 5% to £230 million, but mostly due to increased prices. Many people are taking the chance to enjoy a social pint while watching the games in bars and pubs, whereas last year we were in the middle of a COVID-19 resurgence so consumers were limiting their movements and going out less. We’re likely to be marking the impact of that comparison with higher at-home volumes one year ago. Crisp and snacks have fared better this winter, however, with sales up by 18%.”
Even so, Kantar said a combination of inflation and festive spending means that the coming month is on course to be the biggest ever for take-home grocery sales. McKevitt said: “December looks set to be a record-breaking month with sales going above the £12bn mark for the first time. We’re expecting Friday 23 December to be the busiest day for pre-Christmas shopping.”
As for the individual supermarkets, the strong growth of the discounters continued, not surprisingly in the face of the cost of living crisis.
In the last twelve weeks, Lidl’s year-on-year sales increased by 22.0%, pushing its market share to a record 7.4%. An additional 1.5mln households shopped with Aldi compared with 2021 as it grew sales by 24.4% to claim 9.3% of the market.
Asda’s sales grew ahead of the sector, up by 6.1%, keeping its share steady at 14.0%. Tesco PLC (LON:TSCO) saw its market share hit 27.2% as its sales rose by 3.9%. The second largest retailer, J Sainsbury PLC, pushed up sales by 4.3% this period.
Convenience retailer Co-op increased sales by 3.5% and achieved 6.0% market share. Waitrose’s market share was at 4.5% while Iceland’s sales grew by 6.1%, as its share remained at 2.3%. Ocado’s market share was slightly down at 1.7%, with sales declines concentrated in its traditional south east and London heartland. However, the online specialist continued to expand its reach in northern England.
8.12am: Market edges lower in early trading
Leading shares have opened in the red in the wake of Wall Street's overnight decline, with US markets unsettled by a combination of positive service sector data yesterday and further reaction to the stronger than expected wages figures on Friday.
Taken together, these suggest that the Federal Reserve is unlikely to take a dovish view on interest rate rises when they meet next week, when a 50 basis point increase is forecast with more to follow.
So the FTSE 100 is down 12.58 points or 0.17% at 7554.96 ahead of a handful of UK economic data.
Today sees the latest UK supermarket report from Kantar as well as construction figures for November.
On the latter, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV), said: "The UK’s construction sector will be in focus with investors keen to find out if October’s resilience, with activity boosted by a backlog of orders, will have continued.
"There were already some signs of weakness emerging in last month’s PMI update, given that residential work grew at a softer pace, and with mortgage rates shooting up, there will be concerns that this could feed through to future orders. The overall pessimism across the sector was clear and so these numbers will be picked apart to find out if weakness is spreading."
In the US, there will be interest in the last knockings of the Senate elections.
Jim Reid at Deutsche Bank (ETR:DBKGn) said: "Today is an important one in US politics as the Georgia Senate run-off election takes place. This doesn’t have quite the significance it did two years ago, since the Democrats already have 50 seats and will control the Senate regardless of the result thanks to Vice President Harris’ casting vote.
"But it will still have important implications, since a 51-49 margin means the Democrats could still win a Senate vote even if they lost one of their number like Senator Joe Manchin. Furthermore, since Senate seats only come up every 6 years with just a third of the chamber elected each time, a victory for either side would make it easier for them to gain control in the 2024 and 2026 elections as well, since that Georgia seat wouldn’t be up for election again until 2028."
7.44am: Greenback gains against pound and euro, but rally may be short lived
Yesterday's UK services PMI data yielded few surprises- with cost pressures showing little signs of abating and operating expenses rising, output dropped to levels last seen in January 2021.
So it didn’t come as a shock to see a weakening of the pound against the US dollar.
GBP/USD fell 0.8% to 1.219 in Monday’s session, and continued to fall another 10 pips this morning.
GBP/USD contracts, but it could be a short-term price movement – Source: capital.com
But the pair is unlikely to remain in a downward trend. Although the US dollar index (DXY) rose in the last session, in part due to a surprisingly strong services reading, the index is on a bearish course in the long run.
A black Friday boost saw a 4.1% jump in monthly UK retail sales in data released this morning, which has already proved a catalyst for gains against the greenback.
Sterling took less of a hit against the euro. While EUR/GBP rose 0.4% to 86.08p on Monday, the pair has since cut back to 85.97p in today’s Asia trading window.
The pound is also looking strong against the yen, having already jumped 0.6% to 167.47 in the GBP/JPY pair this morning.
Greenback’s solid performance in the past could of days has caused EUR/USD to edge back from its recent five-month high, with the pair dipping 0.45% to 1.049 yesterday and continuing the trend downwards to 1.047 in today’s Asia trading hours.
7.01am: Footsie set for lower start
FTSE 100 expected to lower today reflecting heavy falls in the US following stronger-than-expected ISM services data that prompted fears about the US Federal Reserve's rate hike trajectory again.
Spread betting companies are calling the lead index down by around 12 points.
US markets extended their losses to close sharply lower as a strong ISM services index report added to fears that the Federal Reserve will keep on hiking rates which had been fuelled by Friday’s hot jobs report and average earnings data.
At the close the Dow Jones Industrial Average was down 483 points, or 1.4%, to 33,947, the S&P 500 slipped 73 points, or 1.8%, to 3,999 and the Nasdaq Composite declined 222 points, or 2%, to 11,240.
Mickey Levy at Berenberg noted commentary from ISM Services survey respondents generally pointed to solid demand, sustained input price pressures, and elevated supply and labor shortages.
“Given the Fed’s focus on services inflation as a bellwether for underlying inflationary pressures, sustained overheated demand in service sector industries will likely tip the Fed toward a higher rate path policy” he felt.
Back in London and results are expected from FTSE 100-listed but US-focused Ashtead Group PLC (LON:AHT) and former blue chip Ferguson PLC today.
Retailers will be in focus after the latest British Retail Consortium-KPMG monitor showed an increase in retail sales of 4.2% on year in November, topping the three- and 12-month average growth rate of 2.6%.
The S&P/ASX 200 in Sydney closed down 0.5% as The Reserve Bank of Australia decided to increase its cash rate target by 25 basis points to 3.10%, and signalled more rate hikes are to come.