Grocery price inflation at lowest level for a year

Grocery price inflation has dropped to its lowest level in over 12 months, new figures show.

Kantar data indicates price inflation stood at 12.2 per cent for the four weeks to 3 September 2023. Take-home sales from the grocers rose by 7.4 per cent compared with the same period in 2022, a slight increase on the 6.5 per cent growth reported last month.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocery price inflation is down for the sixth month in a row but 12.2 per cent won’t be a number to celebrate for many households. Our data shows that 95 per cent of consumers are still worried about the impact of rising grocery prices, matched only by their concern about energy bills.

”After a full year of double-digit grocery inflation, it’s no surprise that just under a quarter of the population consider themselves to be struggling financially – although this is a very slight drop compared to May.”

The hunt for value

The discounters have benefited from the inflationary context, with knock-on effects for British shopping habits more generally, according to McKevitt. “We’re now marking one year since Aldi became the fourth-largest supermarket in Britain and alongside Lidl, it has made some of the biggest market share gains over the past 12 months as consumers continue their hunt for value,” he explained.

”This month, Aldi grew sales by 17.1 per cent and Lidl by 16 per cent. Between them, the discounters now capture 17.7 per cent of the sector. We expect this performance to continue as inflation remains stubbornly high, however, growth rates for both the discounters have been slowing in recent months as they annualise against rapid rises last year.”

Own-label growth

One of the notable stories of recent times has been the boost in own-label sales, which dominate Aldi and Lidl’s shelves. Sales grew again by 9.9 per cent in the latest month and supermarket lines now make up over half of everything British shoppers buy, up from 48 per cent in August 2013.

That is equivalent to a £3 billion shift in sales away from brands, McKevitt noted. “The discounter model of offering everyday low value and fewer promotions has also caught on in the wider market, with only 26 per cent of spending now on deals, compared with 38 per cent 10 years ago,” he added.

Sainsbury’s and Tesco tops 

Sainsbury’s and Tesco were the fastest-growing traditional retailers this month, growing sales by 9.1 and 9.3 per cent respectively. Tesco’s share now stands at 27.2 per cent, up by 0.3 percentage points from last year, and Sainsbury’s at 14.8 per cent, up by 0.2 percentage points.

Asda’s market share is at 13.8 per cent and Morrisons’ 8.6 per cent, with sales up by 5.1 and 2 per cent respectively. Waitrose’s growth accelerated to 5.6 per cent this month, meaning that the retailer now holds 4.6 per cent of the market. Ocado also saw sales increasing faster than last month, with growth now at 4.3 per cent and market share at 1.6 per cent.

Co-op’s sales were up by 2.5 per cent versus a year ago, with the convenience retailer now holding a 6.1 per cent market share. Iceland’s sales rose by 4.3 per cent to take a share of 2.3 per cent.