Grocery inflation fell albeit at slower rate

Grocery price inflation fell slightly to 6.8 per cent in January, down from 6.9 per cent in December 2023, according to the leading marketing data and analytics company Kantar.  This softer decline compares with a 2.2 percentage point decrease seen between November and December 2023. 

Meanwhile, take-home grocery sales grew in value by 2.9 per cent over the four weeks.  

Shoppers have trimmed down in more ways than one this month.  As consumers across the country took on Dry January, spending on alcohol fell by more than half compared with December.  Almost 6 per cent of beer packs sold this month were no or low-alcohol options, marking a jump from 4 per cent at the end of last year.
 
Fraser McKevitt, head of retail and consumer insight at Kantar, explains, “All eyes are back on inflation again, after the Consumer Prices Index’s (CPI) unexpected jump earlier in the month. There’s been a lot of speculation about the impact the Red Sea shipping crisis might have on the cost of goods, but the story in the grocery aisles this January is more about the battle between the supermarkets to offer best value, rather than geopolitics. Retailers have taken their foot off the promotions gas slightly as we’ve come into the new year, and that’s meant inflation hasn’t fallen as quickly.
 
“Items bought on offer accounted for 27 per cent of all grocery spending in January versus 32 per cent last month.  Christmas is always a bumper period for deals and the grocers pulled the price lever especially hard in December, as they sought to get shoppers through their doors. However, there’s still plenty of opportunities for consumers to make savings. The overall trend in offers is up versus this time last year, and nearly £500 million more was spent on offers this January than in the same month in 2023.”
 
“There’s evidence to suggest that people are opting for more homemade meals to keep budgets in line.  86 million more lunchboxes were brought to work last year, for example.  Looking ahead to February, it will be interesting to see how this plays out on Valentine’s Day, and if couples will opt for more low-key celebrations.  This was certainly the case in 2023, when we saw a massive £43 million spent on supermarket meal deals costing £10 or more in the week before the special day.”
 
Sales of own label plant-based ranges increased by 8% on the month, as Veganuary got underway.

Fraser McKevitt adds, “Health always comes to the fore as a priority for consumers in January, but what’s interesting this month is that we’re not seeing as big a spike in health-related categories as we have done in previous years.  That’s because people are now buying more of the typical January ‘health kick’ items throughout the year.  9 per cent of annual own label plant-based sales were made in January in 2023, a steady decline compared with the 11 per cent of sales in 2020.”
 
Both Sainsbury’s and Tesco gained market share over the latest 12 weeks to 21 January 2024 compared with a year ago. Lidl was the fastest growing grocer in Britain for the fifth month in row and the only retailer to see double-digit growth in the latest 12 weeks. Aldi also grew ahead of the market, with sales up by 7.2 per cent while Morrisons’ sales rose by 2.8 per cent.