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Shoppers pick own-brands as food price inflation hits 'normal levels'

Shoppers pick own-brands as food price inflation hits 'normal levels'
Matt Browning
Written By:
Matt Browning

Shoppers continued to go for cheaper own-brand products as food price inflation dropped for the fifteenth consecutive month.

Grocery price inflation is at the lowest level since October 2021, standing at 2.4%. This is only 0.8% higher than the 10-year average from 2012 to 2021, when supermarket prices began to shoot up.

Despite price rises slowing down in May, bargain hunters still looked for good-value deals. They contributed to own-label lines making up more than half (52%) of total supermarket spending, according to analytics group Kantar.

Indeed, the sales of premium own-label ranges were up by 9.9% compared to last year, while take-home grocery sales rose by 2.9% over the four weeks to 12 May.

The early May bank holiday weekend also provided the perfect weather for many UK homes to get their barbecues fired up. This meant sales of burgers, beer and wine all rose by 13%, 9% and 21% on the previous weekend.

‘Summer of sport could deliver welcome booze sales boost’

And with a summer packed full of sporting tournaments on the horizon, including the men’s UEFA European Championships and the Olympics, booze sales are expected to represent a large chunk of customer spending.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Major sporting events can have a big impact on grocery sales, particularly in categories like alcohol.

“During England’s quarter-final match against France in the 2022 FIFA Men’s World Cup, take-home beer sales hit their biggest daily takings of the year outside of Christmas. Especially if it’s paired with warmer temperatures, this year’s summer of sport could deliver a welcome boost for the sector.”

Despite the slowing-down of food price inflation, McKevitt thinks it’s unlikely shoppers will change their habits from the cautious approach adopted during the cost-of-living crisis.

McKevitt described grocery price inflation as “gradually returning to what we would consider more normal levels”.

He added: “Typically, an inflation rate of around 3% is when we start to see marked changes in consumers’ behaviour, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops.

“However, after nearly two-and-a-half years of rapidly rising prices, it could take a bit longer for shoppers to unwind the habits they have learnt to help them manage the cost-of-living crisis.”

Markets that did feel a hike in pricing were chilled fruit juices and drinks, sweets and chocolate. But everyday essentials including tissues, butter and milk dropped in price.

Lidl records best-ever market share

In terms of where customers headed to get their deals, Lidl managed a record market share of 8.1% thanks to its bakery counter goods, which represented a quarter of every sale in the last 12 weeks. That’s still slightly lower than its budget rival retailer Aldi – the cheapest supermarket in the UK – which has 10% of shoppers going through its doors.

The budget retailer’s reward scheme, Lidl Plus, also boosted the sale of bakery items by over 40%.

Elsewhere, supermarket giant Tesco held on to the largest share of the market with 27.6% of shoppers choosing the grocer – that’s an increase of 0.5% since last year.

The retailer also saw a 5.6% growth in sales, which was equalled by its competitor Sainsbury’s, which remained the second-busiest retailer in terms of attracting customers, with 15% of the market share. Asda is in third place with 13% of the market.

Ocado remained the fastest growing in the 12 weeks leading to 12 May, as sales grew by 5.4%. In London, the online supermarket attracted 3% of shoppers, which drops to 1.8% for the whole of the UK.

Its popularity is rising, though, and in the South and South East of England, a fifth of all households grabbed an Ocado delivery in the last 12 weeks.