A new report from IGD, providers of research and information on the food and grocery industry, suggests the UK grocery retail market will top £118.1 billion ($216bn; €176.5bn) by the end of this year – a rise of 2.7%.

The Grocery Retailing 2004 report reveals that 13% of household spending is on food and grocery, making it the third largest category of expenditure.

IGD attributes the growth to a rise in purchases of non-food items which will account for 10% of total annual sales by the end of the year and consumer upgrades to 'premium ranges'.

Despite very low food price inflation – at 0.5%, and 2% below background inflation – IGD expects the market to continue to grow at around 2.5% a year for the next five years, by which time it will be worth £133.5bn (at current prices).

According to David Gordon, IGD business manager, convenience markets will fuel the growth, rising from £23bn to £29bn by 2008.

Hypermarkets are also expected to contribute to overall growth, with another 200 stores being added to the existing 600 over the next four years.

Says Gordon: "The hypermarkets will continue to develop to satisfy consumers' desires for non-food and one-stop shopping."

Data sourced from: Daily Research News Online; additional content by WARC staff