Grocery price inflation slips to lowest level in over a year

In the four weeks to September 3, 2023, grocery price inflation hit 12.2% – the lowest level seen since 2022, according to the latest grocery market share data from Kantar.

Despite inflation dropping to its lowest levels seen this year, Kantar head of retail and consumer insight Fraser McKevitt said the numbers will not be anything to celebrate.

“Our data shows that 95% of consumers are still worried about the impact of rising grocery prices, matched only by their concern about energy bills,” he said.

“After a full year of double-digit grocery inflation, it’s no surprise that just under a quarter of the population consider themselves to be struggling financially – although this is a very slight drop compared to May.”

Kantar said that discount retailers have benefited from ongoing inflation, 12 months on from the date that Aldi officially overtook Morrisons to become the fourth-largest grocer by market share in the UK.

“Aldi, alongside Lidl, has made some of the biggest market share gains over the past 12 months as consumers continue their hunt for value,” said McKevitt.

“This month, Aldi grew sales by 17.1% and Lidl by 16%. Between them, the discounters now capture 17.7% of the sector.

“We expect this performance to continue as inflation remains stubbornly high; however, growth rates for both the discounters have been slowing in recent months as they annualise against rapid rises last year.”

Kantar noted that sales in own-label grew 9.9% in the last month and now make up more than half of all grocery sales, up from 48% in August 2013. It said this represented a £3bn shift in sales away from brands.

Kantar’s McKevitt also commented on the collapse of value retailer Wilko, noting: “Shoppers have been making the most of Wilko’s closing sales, with its share of non-food groceries like toiletries, healthcare and household goods jumping from 1.8% in July to 2.3% in August.

“However, its sales are still down on last year and consumers are going elsewhere. Tesco, Aldi and the bargain stores, such as Poundland, B&M and Home Bargains, have been the biggest winners of customers switching spend away from Wilko.”

Sainsbury’s and Tesco were the fastest-growing “traditional” grocers in the month – with sales growing 9.1% and 9.3% respectively. Asda’s market share stands at 13.8% and Morrisons at 8.6%, with sales up by 5.1% and 2% respectively.

Waitrose’s growth accelerated to 5.6% in the period, while Ocado sales increased faster, with market share up to 1.6%.