Small dip may not mean lower prices in the foreseeable future, Kantar predicts

Grocery price inflation has dropped slightly, but analysts warn that prices may not come down soon.

Food and drink prices rose by 17.3 per cent in the four weeks to 16 April 2023, according to Kantar. That’s down marginally on the 17.5 per cent recorded in the previous four weeks. Take-home grocery sales grew by 8.1 per cent over the month to mid-April.

Fraser McKevitt, head of retail and consumer insight at Kantar, explained: “The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top. We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year.

”We think grocery inflation will come down soon, but that’s because we’ll start to measure it against the high rates seen last year. It’s important to remember, of course, that falling grocery inflation doesn’t mean lower prices, it just means prices aren’t increasing as quickly.”

After ten months of double-digit price growth, the British public is continuing to turn to own label lines to help manage spending. Own-label lines are still growing at 13.5 per cent in the latest period, suggesting shoppers are finding better value for money on shelves.

The very cheapest value own-label lines are doing even better, with sales soaring by 46 per cent versus a year ago. These products now find their way into nearly one in five baskets. Branded sales are going up too, but more slowly at 4.4 per cent.

Record share for discounters 

Amid rising prices, both Aldi and Lidl hit new record market shares over the latest 12 week period at 10.1 and 7.6 per cent respectively. Lidl was the fastest-growing grocer with sales increasing by 25.1 per cent, while Aldi is just behind on 25.0 per cent.

Supermarkets are looking forward to vigorous sales around the three bank holidays in May, including for the Coronation. “We’ve recorded bumps in supermarket sales for previous major royal events,” said McKevitt. ”During the week of the Platinum Jubilee last year they were £87 million higher than the average in 2022.”

The three largest grocers continued to grow at similar rates in the 12 weeks to 16 April 2023. Asda led the pack with sales up 8.8 per cent year on year, giving the retailer a 14 per cent share of the market. Tesco and Sainsbury’s weren’t far behind with their sales increasing by 8 and 8.7 per cent claiming 27 and 14.9 per cent of the sector respectively.