May 19, 2024
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UK grocery price inflation eases as shoppers turn to loyalty cards | Supermarkets

Grocery price inflation eased to 14.9%, the lowest rate since Christmas, as supermarket shoppers sought loyalty promotions.

The fall in inflation over the four weeks to 9 July was partly due to shoppers spending more through schemes such as Tesco’s Clubcard and Sainsbury’s Nectar, but it was also driven by a comparison with a rise in inflation a year ago.

Despite the drop in headline inflation from 16.5%, prices are still rising at a much faster pace than historically.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocery price inflation has now been falling for four consecutive months. It will be good news for many families although, of course, the rate is still extremely high.

“The change comes as spend on promotions has increased 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 changes we’ve seen in this area is retailers raising loyalty card deals such as Tesco’s Clubcard prices and Sainsbury’s Nectar prices.

“The increase in promotional spending has helped reduce inflation but that is not the only thing driving the change. Prices were rising rapidly last summer so this latest slowdown is partly due to the current figures being compared to the higher rates of a year ago.”

He added that families were using various techniques to limit the impact of inflation on their budgets, such as switching to supermarkets’ own labels, visiting cheaper retailers or cutting back on the amount of goods they buy. .

Overall, sales of groceries for home consumption increased by 10.7%, behind the level of inflation, indicating that fewer items were placed in baskets.

“It’s clear that shoppers have changed their behavior to combat inflation, whether it’s by trading up to cheaper products or visiting different grocers,” McKevitt said.

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Discount chains Aldi and Lidl are the biggest beneficiaries of a change in behaviour. Aldi is the fastest growing grocer, with sales up 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 0.7 percentage points to 7.7% following a 22.3% increase in sales.

Sainsbury’s was the fastest growing of the traditional supermarket chains with a 10.7% increase in sales. Morrisons and Ocado followed the pack but recorded first growth of 2.5%, its best performance since April 2021 and the eighth consecutive month of improved performance.

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