UK grocery inflation eases but remains at record level

25th Apr 2023 10:19

(Sharecast News) - Grocery inflation eased marginally in April, industry data showed on Tuesday, but remained close to record highs.

According to research by retail consultancy Kantar, grocery price inflation was 17.3% in the four weeks to 16 April, a marginal improvement on the previous four weeks, when it hit an all-time high of 17.5%.

However, Kantar said it did not believe grocery price inflation - which has now been in double digits for ten months in a row - had peaked.

Fraser McKevitt, head of retail and consumer insight, said: "The latest drop in grocery price inflation will be welcome news for shoppers, but it's too early to call the top. We've been here before, when the rate fell at the end of 2022 only for it to rise again over the first quarter of this year.

"We think inflation will come down soon, but that's because we'll start to measure it against the high rates seen last year. It's important to remember that falling grocery inflation doesn't mean lower prices, it just means prices aren't increasing as quickly."

Grocery sales rose 8.1% during the four-week period. Kantar said Easter had bolstered demand, with 38m chocolate eggs and treats sold in the week running up to Easter Sunday, 5m more than last year.

Own labels also continued to perform well, as hard-pressed shoppers looked to save money. Sales of own label lines rose by 13.5% during the period, while the cheapest value own label lines soared 46%. In contrast, branded sales rose by 4.4%.

Among individual retailers, discounters Aldi and Lidl continued to grow their market share, to 10.1% and 7.6% respectively. Sales jumped 25.0% in the 12 weeks to 16 April at Aldi and by 25.1% at Lidl.

Tesco, the UK's largest grocery by market share, saw sales increase by 8%, while at J Sainsbury's they rose 8.7% and by 8.8% at Asda. Wm Morrison, which has been hit hard by the discounters in recent months, saw sales nudge 0.1% higher.

Waitrose, part of the John Lewis Partnership, saw sales rise by 3.2% - its best performance since June 2021 - while sales improved 8.7% at Ocado.

In the 12 weeks to 16 April, grocery inflation was 17%, with prices rising fastest in eggs, milk and cheese.

Victoria Scholar, head of investment at Interactive Investor, said: "The drop in the headline rate of grocery inflation is a welcome development, but highlights the ongoing food price pressures which continue to negatively impact consumers and squeeze margins for supermarkets, restaurants, cafes and other businesses."

Danni Hewson, head of financial analysis at AJ Bell, said: "To be clear: prices are still shooting up at a ridiculously uncomfortable level that's making every shopping trip something to be endured.

"Inflation-weary has become a well-used phrase but it's what we are all feeling. And even if inflation has finally peered over the peak, higher prices aren't going anywhere any time soon."