UK grocery inflation slows to 3.3% in January, sales rise 4.3%: Kantar

Supermarkets stepped up promotions in January, Tesco gains most market share in 12 weeks to Jan 26

The pressure on British consumers eased a little in January as a step-up in supermarket promotions meant grocery inflation edged lower following four straight months of rises, industry data showed on Tuesday.

 

Market researcher Kantar said annual grocery price inflation was 3.3% in the four weeks to Jan. 26, down from 3.7% in last month's report. Sales rose 4.3% over the period year-on-year.

 

Kantar said the fall in inflation reflected an increased level of promotions from supermarkets. They rose year-on-year by 274 million pounds ($340 million), accounting for 27.2% of sales – the highest level in January since 2021.

 

The researcher said prices are rising fastest in products such as chocolate confectionery, chilled smoothies and juices, and butters and spreads, and are falling fastest in cooking sauces, household paper products and cat food.

 

Despite the January fall in food inflation, supermarkets have warned that tax rises in the new Labour government's first budget in October, together with another hike in the national minimum wage, will be inflationary.

 

Prominent grocery industry researcher, the Institute of Grocery Distribution has forecast that food inflation could hit nearly 4.9% this year.

 

Kantar noted that consumers turned to non-branded products to help keep costs down, with own-label as a proportion of total sales hitting a record high of 52.3% in January.

 

Online supermarket Ocado was Britain's fastest-growing grocer for the ninth consecutive month, with sales up 11.3% year-on-year over the 12 weeks to Jan. 26.

 

Market leader Tesco gained the most share, with its 28.5% share some 70 basis points higher year-on-year, on sales up 5.6%. Sales at No. 2 Sainsbury's rose 4.2%.

 

Shares in Tesco were up 1%, Sainsbury's was up 2.1%, while Ocado was up 1.6%.

 

No. 3 Asda remained the laggard, with sales down 5.2% and a 1-percentage-point loss of market share over the year.

 

Last week Asda's new boss Allan Leighton launched a major round of price cuts in an attempt to kick start a recovery.

 

Kantar noted that Marks & Spencer also performed well, with sales up 10.5%, though the researcher does not include the retailer in its market share data. Shares in M&S were up 2.3%.