Warm Weather Boost For Supermarket Sales

Warm weather boosted grocery sales over the summer as customers took advantage of continued falling prices - which are yet to be affected by the plunge in the pound.

The market grew by 0.3% to £25bn in the 12 weeks to 14 August according to researchers Kantar Worldpanel, with rises of more than 10% for discounters Aldi and Lidl but Tesco (Frankfurt: 852647 - news) also seeing signs of hope as its sales falls slowed.

Separate figures from Nielsen (EUREX: 11400372.EX - news) also pointed to a boost from the Olympics.

Fraser McKevitt, Kantar's head of retail and consumer insight, said there had been a 23% rise in frozen confectionery sales in the last month and that chilled drinks were up 10%,

He said: "The sun's eventual appearance was a welcome boost to the market after a delayed start to the summer."

Kantar said there remained no evidence of Brexit-fuelled inflation, with a basket of goods 1.3% cheaper than last year.

The slump in the value of the pound after the EU referendum vote is expected to make imported goods more expensive meaning higher prices in the shops if this is passed on to customers.

Kantar's figures showed Lidl sales grew 12.2% with Aldi up 10.4%.

Tesco's sales were 0.4% lower, the slowest rate of decline in six months, suggesting it may return to growth later this year - after a decline stretching back to March 2015. Shares (Berlin: DI6.BE - news) rose 3%.

Asda remained in the doldrums with a sales decline of 5.5%. Last week its own figures showed it suffered its worst ever quarterly sales performance earlier this year.

Sainsbury (Amsterdam: SJ6.AS - news) 's fell 0.6% and Morrisons was down by 1.8%, Kantar said, but both saw their shares climb after the figures.

A separate report from Nielsen showed supermarket sales up 0.9% in the four weeks to 13 August, the best figure - excluding Christmas and Easter periods - since November 2013.

Frozen product sales were up 5% including hand-held ice cream up 41%, and champagne up 5%.

Mike Watkins, Nielsen's UK head of retailer and business insight, said: "Brexit seems to have been replaced by an Olympic 'feel-good' factor among shoppers and there were more visits to buy food and drink in the last four weeks than this time last year."