Key facts
- UK grocery inflation slowed to 3.0% in the four weeks ending June 14.
- Grocery sales volume decreased despite a year-on-year sales increase of 2.4%.
- Tesco stated its food inflation rate is below the official May rate of 2.2%.
- Promotions accounted for 30.4% of all grocery sales.
- Lidl GB and Ocado reported the highest sales growth among grocers.
British grocery inflation eased to 3.0% in the four weeks leading up to June 14, according to data from researcher Worldpanel by Numerator. This marks a decrease from 3.1% in the previous month's report and 3.8% before that, potentially alleviating concerns about the impact of Middle East conflict on food prices.
Despite the slowdown in inflation, overall grocery sales volume decreased. Sales increased by 2.4% year-on-year, but this figure accounts for inflation, indicating shoppers purchased fewer items. Sales were boosted by summer staples like sun care and burgers due to a recent heatwave.
Worldpanel noted that prices are rising most rapidly for fresh fish and skin care products, while butter, spreads, and soft drinks are seeing price decreases. Industry leader Tesco stated that inflation driven by the Iran conflict has not yet materialized as a significant issue for them and reiterated that they do not recognize a warning from the Food and Drink Federation predicting nearly 10% food price increases by December. Tesco also reported its own food inflation rate was below the official May rate of 2.2%.
However, the British Retail Consortium, representing major grocers, anticipates food inflation will pick up in the coming months due to rising input costs linked to the conflict. Shoppers are continuing to rely on promotions to manage their bills, with 30.4% of all sales occurring on some form of deal.
In terms of market share over the 12 weeks to June 14, Tesco's sales growth slowed to 1.2%, and its market share decreased by 10 basis points. Sainsbury's saw sales rise by 2.0%, with a market share increase of 10 basis points. Lidl GB was the fastest-growing physical store grocer with an 8.6% sales increase, while online grocer Ocado led overall growth at 13.5%. Asda continued to lose market share.