Grocery price inflation drops below 10% for first time since July 2022
Grocery price inflation has dropped to single digits for the first time since July 2022, now sitting at 9.7% for the four weeks to October 2023.
After 16 months of double-digit growth, this marks a significant milestone for both retailers and consumers.
Take-home grocery sales over the same four-week period rose by 7.4% compared with last year.
Own-label lines grew by 8.0% over the latest four weeks, though the gap is narrowing with branded products, which grew at 6.7% over the same period.
The proportion of sales through promotions is up across every grocer versus last year – something that has only happened on one other occasion in nearly 10 years.
Fraser McKevitt, head of retail and consumer insight at Kantar warned that while the drop to single digits is “positive news” and “something of a watershed” moment, consumers will “still be feeling the pinch”.
“We’re only seeing year-on-year price falls in a limited number of major categories, including butter, dried pasta and milk,” he said.
“Retailers continue to look at ways of softening the blow for shoppers and slowing the rate of price rises. This has included upping the ante on promotions – every single one of the grocers increased the proportion of sales through deals versus last year, which is something that has only happened on one other occasion in nearly 10 years.
“Consumer spending on promotions has now hit 27.2% of total grocery sales – the highest level we’ve seen since Christmas last year. This is a big gear shift from October 2022 when this figure was less than a quarter.”
He added that shoppers have been taking matters into their own hands in a bid to manage their spend.
“It’s now been over a year and a half of pinched pockets and people are continuing to respond by trading down on the items they’re putting into the baskets,” continued Fraser McKevitt.
“Own-label lines have grown ahead of their branded counterparts every month since February 2022, with the latest four weeks showing a sales boost of 8.0% for these lines. However, the picture may well change as we go headlong into the festive period when shoppers typically turn more to brands.”
He added that the fight for shoppers’ Christmas spend looks set to be fierce amongst retailers.
“When it comes to where people shop, Brits definitely aren’t loyal and some of the traditional shopping demographics and stereotypes have been thrown out of the window.
“The typical customer walking through the doors of the discounters is now representative of the country as a whole. Discounters are making their mark in frozen items and fresh groceries like meat and veg, with these categories constituting a higher proportion of their sales than the traditional retailers.”