Food price inflation has dropped to single digits for the first time in a year and a half, as the cost of living crisis eases slightly.
Grocery price inflation slowed to 9.7% in the four weeks to 29 October, the first time the rate has dropped to single digits since July 2022, according to the data company Kantar.
While this is a “big milestone” for the British public and retailers, people are still feeling the pinch as prices continue to rise, said Fraser McKevitt, the head of retail and consumer insight at Kantar.
“We’re only seeing year on year price falls in a limited number of major categories including butter, dried pasta and milk,” he said.
McKevitt added: “Retailers continue to look at ways of softening the blow for shoppers and slowing the rate of price rises. This has included upping the ante on promotions – every single one of the grocers increased the proportion of sales through deals versus last year which is something that has only happened on one other occasion in nearly 10 years.”
Consumer spending on promotions has reached 27.2% of total grocery sales, the highest level since Christmas last year. This is a big shift from October 2022 when the figure was less than a quarter.
Shoppers are continuing to trade down to save money, putting more supermarket own-label items into their baskets rather than more expensive branded goods.
Own-label products have grown more than branded ones every month since February 2022, with own-label sales up 8% in the past four weeks compared with a 6.7% rise for branded sales. However, the picture may change closer to the festive period, as this is when shoppers typically buy more branded items. The gap between own-label and branded goods is at its narrowest since spring last year.
The average price paid for a standard bottle of sparkling wine fell 8%, from £7.46 in August to £6.86 in October. While prices for low-alcohol beer have risen more quickly, sales volumes rose 16% in the past month, aided by the Sober October challenge.
Lidl was again the fastest-growing retailer, with sales over the 12 weeks to 29 October up by 14.7%. Its fellow discounter Aldi attracted 207,000 more customers than last year, and alongside Waitrose was the only grocer to increase its number of shoppers year on year. Aldi and Waitrose increased sales by 13.2% and 5.4% respectively, to take 9.7% and 4.6% of the market.
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Sainsbury’s was the fastest-growing traditional supermarket this month, with sales up 10.1% over the 12 weeks.
The news came as Primark said it pushed through “selective price increases” earlier this year to protect profitability but added the surge in costs was temporary. It posted 8.5% like-for-like sales growth in the year to 16 September, with stronger growth of 10% in the first half compared with 7% in the second.
George Weston, the chief executive of Associated British Foods, which owns the discount retailer, said: “We expect further growth in sales next year driven by new selling space expansion of about 1m sq ft and modest levels of like-for-like sales growth.”
