Food price inflation at lowest level since October 2021

(Alliance News) - Food price inflation fell for the fifteenth month in a row while sales ticked higher, figures on Tuesday showed.

In the four weeks to 12 May, market research firm Kantar said grocery price inflation eased to 2.4%, the lowest level since October 2021. This was lower than the 3.2% reported in the four weeks to April 14, which itself was down from 4.5% in March.

Fraser McKevitt, head of retail & consumer insight at Kantar, said: "Grocery price inflation is gradually returning to what we would consider more normal levels. It’s now sitting only 0.8 percentage points higher than the 10-year average of 1.6% between 2012 and 2021, which is just before prices began to climb."

"Typically, an inflation rate of around 3% is when we start to see marked changes in consumers' behaviour, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops," he added.

In the same four week period, Kantar said grocery sales rose by 2.9%. For the 12 weeks to May 12, total grocery sales rose 3.6% to GBP34.11 billion from GBP32.92 billion a year prior. This was slightly below the 4.3% growth seen in the 12 weeks to April 14.

McKevitt said own-label lines are proving resilient and still growing faster than brands, making up over half of total spending. Sales of premium own label ranges continue to increase too, up 9.9% compared with a year ago.

Kantar highlighted a jump in burger, beer and wine sales as barbecues were fired up during the most recent bank holiday weekend.

"It seems that many barbecues were given their first outings of the year during the most recent bank holiday weekend. Burger sales climbed by 13%, while beer and wine sales shot up by 9% and 21% respectively versus the Friday, Saturday and Sunday of the week before," McKevitt commented.

He suggested sales could rise further in the coming months with the 2024 UEFA European men's football tournament and the Olympic Games on the horizon.

Ocado Retail was again the fastest growing grocer over the 12 weeks to May 12, with sales up by 12.4% to GBP613 million from GBP546 million a year prior – well ahead of the total online market, which saw sales increase by 5.4%.

The online-only grocer is a joint venture between Ocado Group PLC and Marks & Spencer Group PLC.

Lidl reached a new record-high market share of 8.1%, fuelled in part by its bakery counters, as well as its loyalty scheme. Sales in the 12 weeks to May 12 rose 9.4% to GBP2.77 billion from GBP2.53 billion.

Sales at Britain's biggest grocer Tesco PLC rose 5.6% in the 12 weeks to May 12 to GBP9.43 billion from GBP8.93 billion, taking its market share to 27.6% - an increase of 0.5 percentage points since last year. It was Tesco's largest annual share gain since January 2022.

Its 5.6% growth in sales was matched by J Sainsbury PLC, whose market share nudged up 0.3 percentage points to 15.1%.

Here, sales in the 12 weeks to May 12 reached GBP5.15 billion, up from GBP4.88 billion.

Asda, meanwhile, holds 13.1% of the grocery market, while Aldi and Morrisons captured 10.0% and 8.6% respectively.

Convenience specialist Co-op's share of the market is now 5.4%. Both Waitrose and Iceland held market share steady, with the former remaining flat at 4.6% and the latter at 2.3%.

Shares in Tesco were down 0.2% at 310.00 pence in London on Tuesday. Shares in J Sainsbury eased 0.6% to 283.00p. Shares in Ocado fell 0.9% to 351.10p.

By Jeremy Cutler, Alliance News reporter

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