Grocery price inflation has eased to 14.9%, the lowest rate since Christmas, as supermarket shoppers sought out loyalty card promotions.
The fall in inflation over the four weeks to 9 July was partly the result of shoppers spending more via schemes such as Tesco’s Clubcard and Sainsbury’s Nectar, but it was also driven by a comparison with a step up in inflation a year ago.
Despite the dip in supermarket inflation from 16.5%, prices are still rising at a much faster pace than they have done historically.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Grocery price inflation has now been falling for four months in a row. That will be good news for many households although, of course, the rate is still incredibly high.
“The change comes as spending on promotions has gone up for the first time in two years, now accounting for just over a quarter of the total market at 25.2%. One of the biggest shifts we’ve seen in this area is retailers ramping up loyalty card deals such as Tesco’s Clubcard prices and Sainsbury’s Nectar prices.
“The boost to promotional spending has contributed to bringing inflation down but this isn’t all that’s driving the change. Prices were rising quickly last summer so this latest slowdown is partially down to current figures being compared with those higher rates one year ago.”
He added that households were using a variety of techniques to limit the impact of inflation on their budgets such as switching to supermarket own labels, visiting cheaper retailers or cutting back on the amount of items they buy.
Overall sales of groceries for consumption at home rose by 10.7%, behind the level of inflation, indicating that fewer items were put in baskets.
“It’s clear that shoppers have dramatically changed their behaviour to combat inflation, whether by trading down to cheaper products or visiting different grocers,” McKevitt said.
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Discount chains Aldi and Lidl have been the main beneficiaries of changing behaviour. Aldi is the fastest-growing grocer, with sales up by 24% in the 12 weeks to 9 July. It holds 10.2% of the market, up from 9.1% a year ago. Lidl increased its market share, up by 0.7 percentage points to 7.7% after sales increased by 22.3%.
Sainsbury’s was the fastest growing of the traditional supermarket chains with sales up 10.7%. Morrisons and Ocado trailed the pack but the former recorded growth of 2.5%, its best showing since April 2021 and its eighth month in a row of improved performance.
