Grocery price inflation still at record high despite first drop in nearly two years

While the rate of grocery price inflation fell 0.1 percentage points to 14.6% in November, near-record price rises have seen sales of festive staples such as mince pies and Christmas puddings fall year on year, according to the latest Kantar grocery market share data. 

Head of retail and consumer insight at Kantar Fraser McKevitt said: “As we move into the busiest time of the year for supermarkets, there are signs that the pace of grocery price inflation is easing off slightly as we saw a small dip of 0.1 percentage points this month – the first drop in 21 months.  

“Grocery inflation still has a long way to come down, though, and based on the current rate, shoppers will have to spend an extra £60 in December to buy the same items as last year.

“The cost of a traditional Christmas dinner for four has hit £31 in 2022, an example of just how much rising prices are impacting people at the tills and in their daily lives.”

Despite the headwinds, take-home grocery sales increased by 5.9% year on year in the 12 weeks to November 27, 2022. The combination of high prices and festive spending over the course of the next month means that December is on course to be the “biggest ever” for grocery sales. 

“December looks set to be a record-breaking month, with sales going above the £12bn mark for the first time. We’re expecting Friday, December 23 to be the busiest day for pre-Christmas shopping,” said McKevitt. 

McKevitt also said Kantar was seeing evidence of customers employing “coping strategies” to mitigate soaring prices and conserve budgets heading into December. 

“We’re seeing yet more evidence of the coping strategies shoppers are adopting to mitigate rising costs and, in particular, own-label sales are growing at pace, now up 11.7% year on year,” he said.

“The cheapest-value own-label lines have soared by 46.3%, but people still want to find room for treats at this time of year and this is driving growth at the other end of the spectrum, too. Premium own-label sales are up by 6.1% to £461m in November.”

One of the unknown factors heading into the period had been the first-ever winter World Cup. Kantar said that, despite England’s strong showing so far in the tournament, this has not translated into rapidly rising sales for supermarkets. 

“We haven’t seen a big World Cup effect – at least, not yet. Take-home beer sales nudged up slightly in the last four weeks, covering the first week of the tournament, by 5% to £230m, but mostly due to increased prices.  

“Many people are taking the chance to enjoy a social pint while watching the games in bars and pubs, whereas last year we were in the middle of a Covid resurgence so consumers were limiting their movements and going out less.

“We’re likely to be marking the impact of that comparison with higher at-home volumes one year ago. Crisps and snacks have fared better this year, however, with sales up by 18%.”

Discounters march on

As has been the case for much of the year, the discounters enjoyed another strong period of growth over the last month. 

Aldi wooed an additional 1.5 million households over the period, with sales growing 24.4% as it increased its share to 9.3% of the grocery market. Lidl, meanwhile, increased year-on-year sales by 22%, increasing its market share to a new record of 7.4%.

Asda increased its sales ahead of the wider market, up 6.1%, which helped the grocer keep its market share steady at 14%.

The UK’s largest grocer Tesco’s market share was 27.2% for the period, with sales up by 3.9%. Sainsbury’s, meanwhile, pushed sales up 4.3% in this period. 

C-store specialist Co-op grew sales by 3.5% during the period and hit a 6% market share. Waitrose market share was 4.5%, while Iceland grew sales by 6.1% as cash-strapped customers flocked to frozen foods. 

Pureplay grocer Ocado struggled, with market share slipping to 1.7% and sales declining across its southeast and London heartlands. 

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