Grocery price inflation slowdown slows down

Data and analytics company Kantar revealed today that grocery price inflation fell by a stochastic sliver to 6.8 per cent in January, down from 6.9 per cent in December 2023. 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.

“All eyes are back on inflation again, after the Consumer Prices Index’s (CPI) unexpected jump earlier in the month,” said head of retail and consumer insight Fraser McKevitt. “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% 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.”

McKevitt added that there was evidence to suggest that people are opting for more homemade meals to keep budgets in line, and 86 million more lunchboxes were brought to work last year, he said.

“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.”

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 six per cent of beer packs sold were no or low-alcohol options, marking a jump from four per cent at the end of last year. Sales of own label plant-based ranges increased by eight per cent on the month, as Veganuary got underway.

“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,” said McKevitt. “That’s because people are now buying more of the typical January ‘health kick’ items throughout the year. Nine 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.”