Grocery food inflation hit record levels in the month of January, driving already sky-high shopping bills even higher and wiping out any sense of relief shoppers may have felt at the end of 2022.
Food price inflation hit a record 16.7% in the four weeks to January 22 – the highest level since Kantar began keeping records back in 2008 – adding an extra £788 to UK consumers’ annual shopping bills.
Kantar head of retail and consumer insight Fraser McKevitt said: “Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived. Grocery price inflation jumped a staggering 2.3 percentage points this month to 16.7%, flying past the previous high we recorded in October 2022. Households will now face an extra £788 on their annual shopping bills if they don’t change their behaviour to cut costs.”
Overall take-home grocery sales jumped 5.7% during the four-week period and by 7.6% over the 12 weeks to January 22. McKevitt said grocers were competing with one another now, more than ever, to continue offering value to customers amidst soaring cost of living.
“Competition in the British grocery sector is as intense as it’s ever been as retailers strive to retain shoppers. The grocers have been doing this by boosting their own-label ranges especially, with sales of these lines growing consistently over the past nine months. January was no exception as own-label lines grew by 9.3%, well ahead of branded alternatives which were up by just 1%.
“Across the market, the move is towards everyday low pricing, with many supermarkets offering price matching and using their loyalty schemes to help shoppers save. As a result of this push, the proportion of spending on promotions has fallen to its lowest level since at least 2008 this month, exaggerating the usual post-Christmas drop off in deals.”
Despite surging prices, Kantar found that many customers still committed to health kicks such as Dry January, while sales of own-label lines surged 9.3% as the proportion of spending on promotions dropped to its lowest level since at least 2008.
Discounters dominate
Aldi was the fastest-growing grocer for the fourth month in a row this period, with sales 26.9% higher year on year. It now holds 9.2% of the market. Lidl’s sales jumped by 24.1%, putting its market share at 7.1%.
By contrast, there was little to split Tesco, Sainsbury’s and Asda. Sainsbury’s sales increased by 6.1%, just 0.1 percentage point higher than Asda and Tesco, giving it 15.4% of the market. Tesco remains the largest British retailer with a 27.5% market share, while Asda holds 14.2%.
Although its sales fell by 1.9%, Morrisons’ performance has continued to improve for the 11th month in a row and its market share now stands at 9.1%.
Iceland’s share increased by 0.1 percentage point to 2.5%, driven by an annual sales rise of 10.6%. Ocado matched the market’s growth rate at 7.6%, well above overall online sales which were down 0.7%. Convenience specialist Co-op has a 5.5% share of the market and Waitrose accounts for 4.7% of total sales.
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