UK grocery price inflation drops to 2.4%, lowest since October 2021

By:
on May 21, 2024
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  • Grocery price inflation for the four weeks to 12 May is at its lowest since October 2021.
  • Sales of premium own-label ranges continue to increase, up by 9.9% compared with a year ago.
  • Some items, such as chilled fruit juices and chocolate, are still seeing significant price rises.

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Grocery prices are rising at more normal levels following last year’s record surge, as new figures today showed inflation for supermarket goods was just 2.4%.

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According to market research firm Kantar, grocery price inflation for the four weeks to 12 May is at its lowest since October 2021.

This 2.4% rate of price increases, down from 2.9% in the previous four-week period, is now less than a percentage point away from the average pace in the 10 years before prices started to accelerate in 2021.

Consumer behavior shifts with easing inflation

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Fraser McKevitt, head of retail and consumer insight at Kantar, commented on the trend, stating, “Grocery price inflation is gradually returning to what we would consider more normal levels. Typically, an inflation rate of around 3% is when we start to see marked changes in consumers’ behavior, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops.”

McKevitt noted that after nearly two and a half years of rapidly rising prices, it might take longer for shoppers to unwind the habits they have learned to manage the cost of living crisis. Own-label lines are proving resilient and are still growing faster than brands, making up over half (52%) of total spending. Sales of premium own-label ranges continue to increase, up by 9.9% compared with a year ago.

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Some items, such as chilled fruit juices and chocolate, are still seeing significant price rises. However, prices of dairy products like butter and milk are falling, indicating a varied trend across different categories. This shift suggests that while overall inflation is stabilizing, specific sectors within the grocery market are experiencing different dynamics.

Market share shifts among grocery retailers

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Despite stabilizing prices, the trend of discounters taking a larger share of the grocery market has continued. Lidl hit a new all-time high in market share, with a surge in bakery sales helping it claim 8.1% of grocery sales. Aldi also secured a 10% market share, reinforcing the strong performance of discount retailers.

Meanwhile, Tesco continued to hold a comfortable lead over second-placed Sainsbury’s as the market leader. Ocado was again the fastest-growing grocer. Of the ten grocers measured by Kantar, only Asda and the Co-Op saw sales fall.

UK Economic Inflation