European Grocery Prices Rise At Slowest Pace For Six Years

The prices paid for everyday items, such as food, drinks and toiletries, rose at its slowest pace across Europe in six years, according to Nielsen retail performance data released today. As a result, consumers are buying more of these items – sales volumes increased year-on-year for the eighth consecutive quarter.

In the first quarter of 2016, prices paid for fast-moving consumer goods (FMCGs) rose just 0.7%, the smallest increase since Q1 2010 (0.5%), whilst volumes rose 0.8% year-on-year. Consequently, grocery retailers saw a 1.5% increase in takings at the till – the lowest figure for nearly three years (1.2% in Q2 2013).

“Europe was dragged down this quarter by significant falls in prices being paid in two of the big five markets – Germany and Italy,” said Nielsen’s European director of retail insights Jean-Jacques Vandenheede. “Lower prices are being driven by fierce price competition among the retailers and falling production costs, mainly due to lower energy prices.”

Across the 21 European countries measured, Turkey had the highest growth in takings at the tills (+9.7%), followed by Poland (+4.8%) and Hungary (+4.6%). At the other end of the scale, the biggest declines were in Greece (-6.1%) and Finland (-2.8%).

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Of the big five western European markets, Spain (+3.1%) had the highest growth, followed by France (+2.2%). Germany was the only one of the big five to experience a year-on-year decline in takings at the tills (-0.4%) and one of only four countries in the whole study to decline.

The UK moved into positive territory (+0.5%) for the first time in nearly two years (since Q2, 2014), however, the growth figure was still the sixth lowest among all 21 countries.

nielsen-prices-europe-q1-2016-2Vandenheede observed: “The picture across Europe is one of disparity, almost chaos. There is no consistency in performance between countries and no one big trend. As far as the FMCG sector is concerned, Europe is not behaving like a unified market.”

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