Sales of food and drink fall for first time

FAMILIES have cut back on the food in their supermarket trolleys for the first time on record as the credit crunch bites deep into household budgets.

The amount of food and drink bought in supermarkets and other stores fell 0.1 per cent in the three months from June to September compared with the same period last year, the first year-on-year drop since records began in 1986.

The figures show how shoppers are tightening their belts in response to the soaring cost of staples such as bread, pasta, rice, milk and meat. In August food inflation hit 14.5 per cent.

It comes on the eve of figures expected to confirm that the British economy tipped into recession over the summer. Usually the total volume of food sales goes up every year typically by two to three per cent as British consumers get steadily better off.

However, the combination of rising supermarket bills and other squeezes on household budgets has forced shoppers to cut back on their biggest and most essential weekly expense.

This time it fell by 0.1 per cent, although rising prices meant shoppers paid six per cent more to buy less. Sales fell 0.1 per cent in June, 1.3 per cent in August and 1.1 per cent last month. They grew by 0.2 per cent in July.

Howard Archer, chief UK and European economist at forecasters Global Insight, said: "These figures are clearly a sign that very high food prices mean people are having to cut back." Shopping in food stores accounts for 43 per cent of all spending by consumers, of which 37 per cent is in supermarkets. Overall retail sales volumes were up 2.3 per cent on last year with non-food up by three per cent.

However, there was more evidence of dramatic cutbacks in figures today from high street electrical giant DSG, owner of Currys, Dixons and PC World. Its like-for-like sales were down seven per cent in the 24 weeks to 18 October. Computer sales were 11 per cent lower.

The British economy is expected to have contracted by around 0.2 per cent between June and September, the first time it has shrunk since spring 1992.

However, an official recession will not be declared until January as it is defined by economists as two consecutive quarters of negative growth.

David Kern, economic adviser to the British Chambers of Commerce, said: "The GDP figures will almost certainly show negative growth in the third quarter of 2008. We expect the decline to be 0.3 per cent, although one cannot rule out a worse figure.

"While the news is grim, it's important not to exaggerate the gloom, which would unnecessarily depress confidence. The UK is not in a severe slump and we can still avoid the worst."