UK Grocery Inflation Eases to 4.0%, a Nine-Month Low

Summary of Key Findings

UK grocery inflation slowed to 4.0% in the four weeks ending January 25, marking its lowest level in nine months. The data from market researcher Worldpanel by Numerator indicates a slight deceleration from the previous period's rate of 4.3%, offering some relief for consumers.

Market Overview

This figure serves as an early indicator for the official UK inflation data and is closely monitored by the Bank of England, which considers food prices a key factor in public inflation expectations. Overall grocery sales saw a 3.8% year-on-year increase in value terms during the period, although this represents a decline in volume when accounting for inflation.

Impact on Retailers and Consumers

Consumer behavior continues to be driven by value, with own-label products achieving a record market share of over 50% of all grocery spending. This trend highlights a persistent focus on cost-saving among shoppers.

Supermarket Performance Highlights

Over the 12 weeks to January 25, market leader Tesco saw sales rise by 4.4%, while Sainsbury's sales increased by 5.3%. The fastest growth was recorded by online supermarket Ocado, with sales up 14.1%. Discounter Lidl also performed strongly, with a 10.1% sales increase. In contrast, Asda's sales fell by 3.7%.

Conclusion

While the easing of grocery inflation is a positive sign, the market landscape remains intensely competitive. Consumers' focus on value continues to benefit discounters and own-label brands, putting pressure on traditional supermarkets to adapt their pricing and product strategies.

FAQ

Q: What is the current UK grocery inflation rate?
A: The rate was 4.0% for the four weeks to January 25, the lowest level recorded since April of the previous year.

Q: Which supermarket is growing the fastest?
A: Ocado reported the fastest overall sales growth at 14.1%, while Lidl was the fastest-growing physical retailer with a 10.1% sales increase.

Q: How are consumers responding to food prices?
A: Consumers are prioritizing value, leading to a record-high market share for own-label products, which now account for more than half of total grocery expenditure.

Source: Investing.com