UK: Grocery price inflation at two-year low

In the UK, grocery price inflation has slowed to a two-year low, with supermarket prices 5.3% higher than a year earlier in February, according to analyst Kantar. This marks the lowest rate since March 2022, down from January’s 6.8%. The impact of the Red Sea shipping crisis on goods prices was offset by intense competition among supermarkets. Grocery sales grew by 5.1% in the four weeks to February 18.

Tom Steel, Strategic Insight Director at Kantar, mentioned that the easing of price rises is particularly welcome for consumers who have been navigating a grocery inflation rate of more than 4% for the past two years. Despite concerns about the Red Sea shipping crisis, supermarkets have been striving to keep prices down to assist people in managing their budgets.

A separate report from the British Retail Consortium revealed that food inflation fell to 5% in February from 6.1% in January, influenced by declining energy costs and a price war among supermarkets. In an effort to compete, Morrisons launched a price match scheme with Aldi and Lidl, following Asda’s similar move in January. The report also highlighted increased consumer spending on promotions, particularly around Valentine’s Day, with sales of steak and boxed chocolates seeing notable rises.

Lidl emerged as the fastest-growing grocer for the sixth consecutive month, achieving a 10.9% sales increase over the 12 weeks to February 18, and expanding its market share to 7.5%. Aldi also experienced faster growth than the overall market, with a 5.7% sales increase and a 9.4% market share. Sainsbury’s and Tesco, the largest grocers in Britain, increased their market share with sales growth of 7.6% and 6.2%, respectively. The intense competition and promotions in the market have contributed to the overall moderation in grocery price inflation.

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