Euro shoppers face inflation squeeze

25 July 2011

LONDON: Consumers across Europe are being forced to reduce their grocery spending due to rising inflation, a new report has shown.

According to SymphonyIRI, the research firm, FMCG sales volumes fell in many European nations during the first quarter, including a 1.8% year on year decline in the UK and a 1.6% drop in Germany.

This is partly explained by price increases making themselves felt across the continent, with grocery costs rising by 3-4% in the UK alone.

Such negative sales trends also come at a time of economic uncertainty throughout much of the region, with GDP growth rates falling and public debt concerns on the rise.

Tim Eales, director of Strategic Insight at SymphonyIRI Group, said: "This is the first time we have seen a reduction in grocery sales volume and is in contrast to shopper behaviour during the recession where many countries increased their weekly grocery shop as they traded down their treats to cook at home instead of eat out."

He added: "Consumer confidence is at an all time low across Europe."

The SymphonyIRI Group report also suggested that many European brands are adjusting to changes in the marketplace by increasing their use of price promotions.

Around half of all FMCG products sold in the UK over the first quarter were sold "on deal", a total that reached 27% in Italy and 20% in France, Spain and Holland.

As reported on Warc News earlier this week, European consumer sentiment fell over Q2 2011, according to new Nielsen data.

In all, 22% of Europeans told Nielsen they had no surplus cash for casual spending. Consumers also identified inflation and the rising cost of energy as their biggest concerns during the three-month period.

Data sourced from SymponyIRI Group; additional content by Warc staff