Grocery price inflation saw a slower rate of decline in January while take-home grocery sales grew in value by 2.9% over the four weeks, according to the latest data from Kantar.
Inflation was down to 6.8% in January from 6.9% in December 2023, described by Kantar as a “softer decline” compared with the 2.2% decrease seen between November and December 2023.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “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.”
McKevitt continued: “Items bought on offer accounted for 27% 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.”
Consumers choose to be more mindful of meals
McKevitt said: “There’s evidence to suggest that people are opting for more homemade meals to keep budgets in line.”
The data showed that 86 million more lunchboxes were taken out of the home in 2023, demonstrating a rise in meals prepared at home.
“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.”
He said: “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% of annual own label plant-based sales were made in January in 2023, a steady decline compared with the 11% of sales in 2020.”
Retailers welcome sales growth in 2024
The Kantar data showed that Sainsbury’s and Tesco gained market share over the latest 12 weeks to 21st January 2024 compared with a year ago. Sainsbury’s increased sales by 8.1% to take 15.7% of the market, 0.3% higher than last year, while Tesco grew by 6.3% and now has a share of 27.6% up from 27.5%.
According to the data, Lidl was the fastest growing grocer in Britain for the fifth month in a row and was the only retailer to see double-digit growth in the latest 12 weeks. Spending at the discounter was up by 11.9%, bringing its share of the market to 7.5%. Aldi also reportedly grew ahead of the market, with sales up by 7.2% and its share increased by 0.1% to 9.3%.
Sales at Morrisons rose by 2.8%, with the retailer now holding an 8.8% share. Asda’s share was at 13.7%, with sales rising by 2.1% compared to a year prior.
Waitrose increased sales by 3.5% to hold 4.6% of the market, while Co-op accounted for 5.3%, with sales growing by 1.8%. Iceland saw sales growth of 2.3% to make up a 2.4% share.
Online sales rose by 6.£% in the latest 12 weeks, slightly ahead of Ocado’s growth where spending was 4% higher than the previous year. The retailer now holds a 1.7% share of the total market.
