Grocery inflation edges lower for third straight month

British grocery inflation eased slightly for the third month in a row in June, industry data showed on Tuesday, providing a modicum of comfort for consumers worn down by a cost of living crisis into its second year.

Market researcher Kantar said annual grocery inflation was 16.5 per cent in the four weeks to June 11, down from 17.2 per cent in its May data set.

It said prices rose fastest for products such as eggs, cooking sauces and frozen potatoes.

“This is the lowest rate of grocery price inflation we’ve seen in 2023, which will be a relief to shoppers and retailers,” said Fraser McKevitt, head of retail and consumer insight at Kantar, noting it was still the sixth-highest monthly figure in the past 15 years.

“Price rises are now being compared to the increasing rate of grocery inflation seen last summer, which means that it should continue to fall in the coming months,” he said.

Market leader Tesco said on Friday food inflation was starting to ease and it was hopeful it would moderate through the year. It and most other major grocers have cut the prices of some products in recent weeks.

UK households are changing their behaviour to cut costs. Many are cutting back, trading down to the cheapest own label products, preparing simpler dishes with fewer ingredients and increasingly using microwaves.

“Total spending on [own label] ranges has rocketed by 41 per cent compared to last year and retailers have been quick to respond, expanding their offerings to meet demand.  This has helped the value tier to become the fastest growing part of the market every month since June 2022,” McKevitt said.

Traditionally retailers have priced products at ‘round-pound’ points, but there is evidence that the cost of living crisis is changing that, the data revealed.

“The proportion of products sold for £1, the single most popular price for a grocery item, has almost halved in a year from 9 per cent to 5 per cent.  That’s a big shift.  Traditionally, ‘round-pound’ prices have been attractive to shoppers, who find them easier to relate to and practical as well with no leftover change,” McKevitt explained.

“But, with retailers eager to offer value and cash buying less popular, £1.25 has emerged as an increasingly important price point.  It now vies with £2 as the second most popular price for a grocery item.”

The Kantar data for June provides the most up to date snapshot of UK grocery inflation.

Official data for overall UK inflation in May will be published on Wednesday. It was running at 8.7 per cent in April, with the measure for food and drink at 19.1 per cent.

Kantar said grocery sales rose by 10.8 per cent over the four weeks year-on-year, driven by price rises.