School packed lunches up 17%, ii research finds

Will the supermarkets be feeling the pain too in this back-to-school season?

• Health snacks up the most, ii desk research suggests
• Higher product prices and demand from customers to keep shelf prices contained could see supplier profit margins pressured, but size and scale of some of Britain’s largest suppliers does give negotiating strength, says ii.

Data out today from the British Retail Consortium suggests that prices in shops rose by 5.1% in the 12 months to August, with food price inflation its highest since the global financial crisis in 2008.

New research also published today by interactive investor, the UK’s second-largest direct to consumer investment platform, suggests parents could be faced with finding an extra £61.50 per child this new school year for packed lunches, based on price increases from September 2021–August 2022.

Looking predominantly at the UK’s largest supermarket chain (Tesco) own-brand items, interactive investor explores how staple packed lunch items have risen in price.

The UK’s second-largest investment platform for private investors also looks at how suppliers are faring, with reference to their share price performance over the one-year period of price hikes (29 September 2021 – 25 August 2022).

The cost of what interactive investor identified as a typical packed lunch, perhaps including some additional snacks for break time, is up 17%. Healthier items have gone up the most: Tesco’s own-brand cherry tomatoes are up 88% over the year, and cucumber sticks 37%.

The ‘guilty pleasures’ are up the least – but still plenty: Peperami is up 9% and Nestle's Aero chocolate mousse is up 10%.

Will suppliers be feeling the pinch too?

Keith Bowman, Investment Analyst, interactive investor said: “Higher product prices from suppliers and demand from customers to keep shelf prices contained could see Tesco (LSE:TSCO) profit margins pressured. That said, Tesco’s size and scale potentially give it significant negotiating strength with suppliers, helping it to battle rising costs.

“Giant Swiss food maker Nestle (SIX:NESN) has been battling rising costs with hikes in product prices. As with rival Unilever (LSE:ULVR), its defensive offering is likely to appeal to investors fearing a potential global recession.

“A less than 1% fall for Tesco and a 4% gain for Nestle compares to a near 12% fall for the FTSE All World Index over the period [29 September 2021 – 25 August 2022] , potentially highlighting perceived resilience in the face of high global economic uncertainty and the ongoing energy fallout from the war in Ukraine. But past performance is absolutely no guide to the future.”

Myron Jobson, Senior Personal Finance Analyst, interactive investor, explains: “The escalating cost of packed lunches takes the biscuit at a time when the cost of energy, petrol, and other areas of daily life expenditure is already on the up. This cost burden is even more acute for parents with more than one child going to school.

“This is yet another squeeze on family budgets already bursting at the seams, and it makes it difficult for the poorest families to maintain financial buoyancy. Parents are also faced with ever increasing costs for school uniform, accessories, and other education-related items.

“There’s no escaping rising prices at the moment, and many parents are scrambling for ways to cut costs amid the once-in-a-generation type fall in living standards. Many are already swapping out premium brand products for lower priced alternatives to cut food costs amid the raging cost- of-living storm, but our research today shows that even so-called value brand items haven’t been immune from the inflationary pressures, either.”

Alice Guy, Personal Finance Editor, interactive investor, adds: “School packed lunches are up a staggering 17% this year. It’ll be a double whammy for parents this autumn/winter as a family with two children will have to find an extra £123 this year for school packed lunches on top of crushing energy cost rises. Alarmingly, based on our example of typical lunch box items (but naturally, these items will vary) inflation for school packed lunches is over 4% more than general food inflation of 12.6%.

“For parents trying to give their kids a healthy lunch, there’s a worrying increase in the cost of fresh fruit and veg, which is up even more than ready-made options.”

“Of course, the impact of these price increases will ultimately depend family-to-family, and we are not suggesting these are reflective of everyone’s back-to-school packed lunch list – but they’re indicative examples of a broader trend.”

Example items from a kid’s school packed lunch and their respective parent brands

Source: Tesco (Sep 21 compared with Aug 22 - excluding Clubcard promotions).

‘Extra cost’ assumes two kids with packed lunches.

Ham roll cost based on price for one roll and portion of ham.

Looking more broadly: supermarket value ranges not such good value after all?

Alice Guy, Personal Finance Editor, interactive investor, says: “Our analysis also showed that it could be harder for parents to find cheap food options this autumn/winter, too, as we found several supermarket ‘value’ lines have been removed.  

“Tesco Nightingale Farms cherry tomatoes – which is Tesco’s value range of cherry tomatoes - are no longer available, for example, hence the 88% increase. 

“In fact, we also discovered that there were fewer Clubcard (Tesco’s loyalty scheme) deals available, generally, than last year. And none were available in our example school packed lunch basket, whereas there would have been two Clubcard deals the year before.*

“And it’s not just school lunches that are causing parents a headache. Looking at a wider basket of goods shows that several other “value” options for chicken drumsticks and chickpeas, for example, are also no longer available.”

Tesco’s value range compared to its standard range counterparts

Notes to Editors 

*ii worked out the price increases by comparing a staff members’ personal online Tesco receipts last year to current prices. ii stripped out Clubcard deals but could see that 2 items chosen for kids’ lunchbox had cheaper prices for Clubcard customers last year (receipt shows the original price and the Clubcard price).

Share price performance data: ii using SharePad.