Grocery inflation falls sharply as cooler weather dampens sale of summer hits

Grocery price inflation fell by 2.2 percentage points to 12.7 per cent in the four weeks to Aug 6 2023, according to the latest data from Kantar.  Overall take-home grocery sales increased by 6.5 per cent over the same period, down from 10.4 per cent last month.   

Fraser McKevitt, head of retail and consumer insight at Kantar, comments, “The latest slowdown in price rises is the second sharpest monthly fall since we started monitoring grocery inflation in this way back in 2008. Prices are still up year on year across every supermarket shelf, but consumers will have been relieved to see the cost of some staple goods starting to edge down compared with earlier in 2023. Shoppers paid £1.50 for four pints of milk last month, down from £1.69 in March, while the average cost of a litre of sunflower oil is now £2.19, 22 pence less than in the spring.”

Own-label goods remained popular in the latest four week period, with sales up by 9.7 per cent while branded products rose by 6.4 per cent.

“Own-label sales continue to outpace branded, although the gap between the two is closing. Buying supermarket lines is just one of the ways people have been trying to save money at the tills and we can see the impact on how much they are spending. The average increase in households’ weekly grocery shop is £5.13 compared with last year, well below the £11.27 extra they would have paid if consumers had bought exactly the same items as 12 months ago based on the current rate of inflation,” McKevitt explains.

While consumers grapple with price rises, retailers beyond the supermarkets are also battling to maintain their position on the high street, with news of Wilko falling into administration signalling the extent of the challenges some businesses are facing.  

“Wilko is a popular choice for many shoppers with 7.6 million households visiting its stores to buy groceries in the last year. Grocery items make up just under half of its sales, with homeware at 15 per cent, DIY at 9 per cent and garden products at 7 per cent. Wilko’s rivals will be keeping a close eye on its fortunes in the coming days and weeks as they look to draw some of its shoppers through their doors,” McKevitt says.

Hopes of some sunshine were dashed this July as unseasonable weather put the dampeners on sales of our usual summer favourites.  

“It was a better month for Barbie than barbecues this July as the rain put a spanner in the works for many consumers’ outdoor plans – a stark comparison to last year when we experienced the hottest day on record.  Volume sales of ice creams were down by 30 per cent, while soft drinks sales were nearly a fifth lower than 12 months ago. Halloumi, a new staple of the British summer menu with shopper numbers growing by 218% since a decade ago, was also down by 27 per cent.

“Instead of our usual summer fare, it seems we’ve been turning to more traditional winter warmers. The amount of soup bought has gone up by 16 per cent year on year, while roasting joints have grown by 5 per cent. Cooler temperatures and a wetter than average month may have also put people off from venturing to the shops. Footfall was down for the first time in 18 months with people making 320,000 fewer trips to physical supermarkets than a year ago.”

Symbols and independents saw a minor rise in share and now accounts for 1.8 per cent of the market.

Both Tesco and Sainsbury’s outperformed the market this month, fueled by sales growth of 9.5 per cent and 9.3 per cent respectively over the 12 weeks to 6 August. Tesco boosted its market share to 27.0 per cent while Sainsbury’s held firm year on year at 14.8 per cent.  Asda now accounts for 13.7 per cent of the market, while Morrisons has an 8.7 per cent share.

Aldi was the fastest growing retailer for the fourth month in a row, with sales increasing by 21.2 per cent versus 2022. The discounter now has a market share of 10.2 per cent, a rise of 1.1 percentage points year on year.  Lidl’s sales rose by 19.8 per cent and the retailer now holds 7.7 per cent of the market.

Sales at Waitrose and Co-op rose by 4.4 per cent and 3.4 per cent, giving the retailers market shares of 4.4 per cent and 6.1 per cent. Frozen food specialist Iceland saw sales increase by 6.7 per cent to take a 2.3 per cent share, while Ocado’s share now stands at 1.7 per cent as spending at the online-only retailer grew by 1.4 per cent.