UK supermarket Asda says shoppers are buying less and looking for cheaper items

A worker pushes shopping carts at an Asda store in west London, Britain April 28, 2018. REUTERS/Toby Melville

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LONDON, June 24 (Reuters) – Around two-fifths of customers at Britain’s Asda supermarkets are buying less and swapping branded items for Asda-branded goods when possible to save money amid worsening coronavirus cost-of-living crisis, the retail chain announced on Friday.

UK households are struggling to keep pace with inflation which hit 9.1% in April, its highest level in over 40 years. Food inflation could reach 15% this summer and 20% early next year according to some forecasts. Read more

Asda, Britain’s third-largest grocer after market leader Tesco (TSCO.L) and Sainsbury’s (SBRY.L), said 44% of customers recently surveyed were also buying more products on sale.

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Asda’s comments echo those of Tesco last week, while official economic data also showed UK consumers cut back on purchases in May. Read more

Asda said its latest Monthly Income Tracker, compiled by the Center for Economics and Business Research (CEBD), shows UK households suffered another record drop in discretionary income in May and were at 41.94 pounds (51, $41) per week worse off compared to the same period last year.

He said inflation had pushed up household spending on essentials such as fuel, groceries, energy bills, utilities, mortgages and rent, to 532 pounds a week, a 10.6% year-over-year increase.

After paying taxes and essential bills, the average household had £202 a week of discretionary income, down 17.2% year on year.

Asda said low-income households fared much worse, with their disposable income down more than 100% year-on-year, leaving them with a negative disposable income figure of 58 pounds – meaning their after-tax income did not cover essential living expenses.

He said 20% of households now had “negative discretionary income”, attributing it to the withdrawal of government benefits and the concentration of inflation on key spending areas.

The CEBD said it expects to see a monthly reduction in disposable income throughout 2022, hitting a new low in the fall when energy prices rise again.

($1 = 0.8158 pounds)

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Reporting by James Davey; Editing by Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

Julio V. Miller