UK Grocery Inflation Slows to 3.3% as Sales Rise
According to Kantar’s latest data, British consumers felt some relief in January as UK grocery inflation dropped to 3.3% from 3.7% last month, thanks to increased supermarket promotions. Sales rose by 4.3% year-on-year, reflecting steady consumer demand.
Why Did Inflation Drop?
Supermarket Promotions Up:
Discounts and offers increased by £274 million ($340 million) compared to last year.
Promotions accounted for 27.2% of total sales, the highest January level since 2021.
Prices Still Rising for Some Products:
Most significant price increases: Chocolate, chilled smoothies, juices, butter, and spreads.
Most significant price drops: Cooking sauces, household paper products, and cat food.
How Are Shoppers Adapting?
🔹 Switching to Supermarket Own Brands – Own-label products comprised 52.3% of total sales, hitting a record high as consumers look for savings.
🔹 Online Grocery Boom – Ocado remains the UK’s fastest-growing grocer for the 9th straight month, with sales up 11.3% year-on-year.
Supermarket Performance: Winners & Losers
Tesco (Market Leader, 28.5% Share)
✅ Sales up 5.6% – Gained the most market share (+0.7%).
✅ Shares rose 1%.
Sainsbury’s (No. 2 Supermarket)
✅ Sales up 4.2%.
✅ Shares up 2.1%.
Ocado (Fastest Growing)
✅ Sales up 11.3% over 12 weeks.
✅ Shares up 1.6%.
Asda Struggles (No. 3 Supermarket)
❌ Sales down 5.2% – Lost 1% market share.
❌ New CEO Allan Leighton launched major price cuts to boost performance.
Marks & Spencer (M&S) Shines
✅ Sales up 10.5%, though not included in Kantar’s market share data.
✅ Shares up 2.3%.
What’s Next?
Food Inflation Could Rise Again
Experts predict grocery inflation may reach 4.9% later this year, driven by:
Potential tax increases in Labour’s first budget (October).
A minimum wage hike could raise costs for supermarkets.
Despite the uncertainty, strong promotions and private-label growth are helping British consumers navigate rising food costs
