Consumers are still “feeling the pinch” despite the price of food in UK supermarkets falling to single figures for the first time since July 2022, as the battle between supermarkets to win customers heats up with special promotion deals.
The rate of supermarket price increases eased to 9.7 per cent in October, down from 11 per cent the previous month and well below March’s high of 17.5 per cent, research company Kantar said.
Fraser McKevitt, head of retail and consumer insight at Kantar, said “Grocery price inflation has finally dropped into single digits after 16 months of double-digit growth, marking a big milestone for the British public and retailers.”
He said consumers are still “feeling the pinch” as there are year-on-year price falls in only a limited number of major categories, including butter, dried pasta and milk.
“Retailers continue to look at ways of softening the blow for shoppers and slowing the rate of price rises,” he said. “This has included upping the ante on promotions – every single one of the grocers increased the proportion of sales through deals versus last year, which is something that has only happened on one other occasion in nearly 10 years.
“It’s now been over a year and a half of pinched pockets and people are continuing to respond by trading down on the items they’re putting into their baskets. The gap between own-label and branded goods is at its narrowest since spring last year.”
Own-label lines have grown ahead of branded counterparts every month since February 2022, Kantar found. “The picture may well change as we go headlong into the festive period, when shoppers typically turn more to brands. Branded sales increased by 6.7 per cent in the latest month, raising the distinct possibility that they will push ahead by Christmas.”
Kantar said the decline, from the 11 per cent recorded over the previous four weeks, was still being driven by rival supermarkets discounting as they sought to secure customer loyalty in the run-up to the crucial season for Christmas sales.
Lidl, the low-cost discounter, was leading the pack according to Kantar, with sales up 14.7 per cent in the three months to mid October in the 12 weeks to 19 October. Aldi and Waitrose grew sales by 13.2 per cent and 5.4 per cent.
Sainsbury’s grew the fastest with sales up 10.1 per cent and it now holds a 15.2 per cent share of the market, up from 14.9 per cent last year.
According to the latest data from Kantar, take-home grocery sales over the same period rose by 7.4 per cent compared with 2022.
Victoria Scholar, at interactive investor, said: “Some prices have been falling year-on-year including for butter, dried pasta, and milk, however most prices are still going up. Although it is moving in the right direction, grocery inflation is still stuck sharply above the headline rate of inflation in the UK, highlighting the squeeze on individuals and families from the rising price of food items.
“Supermarkets in the UK have been trying to maintain market share by cutting prices of essential food items this year to lure customers through their doors. They have also been focusing on promotions and loyalty schemes, again to try to boost footfall and prevent consumers from shopping around and trading down to cheaper alternative supermarkets like Aldi and Lidl, which are notoriously competitive on price.”
Sue Davies, of consumer champions Which?, said: “Overall inflation slowing is a good thing but with supermarket prices still much higher than they were a year ago, millions of people are still really struggling to put food on the table – a reality that is likely to be especially bleak for the most hard-up households as we edge towards Christmas.
“Supermarkets can help ease the huge pressure faced by shoppers – especially families and those on low incomes – by offering affordable budget range essentials in their pricier convenience stores. Which? research has found that these stores rarely, if ever, stock the cheapest products.”
