Grocery price inflation in Great Britain has slowed to 4.5%, its lowest level since February 2022, but one in four households are still struggling financially, retail researchers have found.
However, the figures also suggest a change in sentiment with upmarket retailers Waitrose and Ocado the only grocers to win new shoppers in the past three months, according to the latest monthly figures from the analysts Kantar, as growth in more expensive branded groceries outstripped supermarket own-label.
Ocado was the fastest-growing brand, according to Kantar, as price cuts helped the online grocery specialist recover from a post-pandemic slump. In a separate trading statement issued on Tuesday, Ocado Retail reported a near 11% rise in sales to £645m in the three months to 3 March, underpinned by an 8% rise in the number of items sold after introducing more Marks & Spencer branded items and matching Tesco prices on thousands of products.
Hannah Gibson, the chief executive of Ocado Retail which is a joint venture between M&S and technology group Ocado, said the market was stabilising, with shoppers prepared to spend on treats but offsetting the costs by making savings on the basics. “Consumers are feeling a bit more confident. They are very conscious of value but want to spend on things they enjoy,” she said.
Waitrose’s pace of annual sales growth, at 3.9% according to Kantar, was faster than at the discounter Aldi for the first time since 2021. Aldi has been the target of price-match campaigns by Tesco, Sainsbury’s, Asda and Lidl. Only Asda, the Co-op and Iceland trailed behind Aldi’s 3.1% rise in sales, with even struggling Morrisons ahead on 3.6%.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Grocery inflation has come down significantly since hitting an eye-watering peak of 17% in March 2023. However, despite this continued slowdown, many British households are still feeling the squeeze. Twenty-three percent identified themselves as struggling financially in our data – the same proportion as reported in November last year.”
Lidl remains the fastest-growing high street grocer, with sales up by 8.8% helped by a 24% rise in sales of baked goods and a 11% jump in fruit, vegetables and salads.
Across Great Britain, £605m more was spent on promotional deals this month than in March last year, while nearly a third of baskets across Tesco, Sainsbury’s and Asda collectively contained at least one product price-matched to a discounter.
While sales of branded goods are now growing faster than own-label, sales of supermarkets’ premium own-label lines are up by 16.1%, the quickest rate in nearly three years. This may be partly down to budget constraints easing but also points to consumers still seeking out cheaper options to big brands.
Prices are falling most rapidly on key goods such as butter and milk but rose strongly on sugary sweets and chocolate confectionery before Easter, when families stock up on seasonal treats. The number of hot cross buns sold was up 15% on last year.
