Save, make, understand money

Household Bills

Record grocery price inflation adds £600 to annual bills

Paloma Kubiak
Written By:
Paloma Kubiak

Grocery price inflation hit a fresh record in August, adding £571 to the average shopper’s bill. As Brits cut back, budget supermarket Aldi has knocked Morrisons out of the ‘big four’ chains for the first time.

Last month’s 12.4% grocery inflation figure will take average annual bills from £4,610 to £5,181, “if shoppers don’t make changes to what they buy and how they shop to cut costs,” Fraser McKevitt, head of retail and consumer insight at Kantar said.

He noted that categories including milk, butter and dog food are “jumping up especially quickly” at 31%, 25% and 29% respectively.

Over the 12-week period to 4 September, Kantar revealed grocery inflation stood at 11%, based on the price of 75,000 products.

Aldi now the fourth largest supermarket

As concerns mount over the cost-of-living crisis, Kantar said supermarkets are reacting by expanding their own-label ranges with efforts “well received” by shoppers as sales of the very cheapest value own-label products are up 33% in a year.

It revealed one in four baskets now contains one of these budget lines while overall spending on all retailer own-label lines was £393m higher over the past four weeks, pushing this share of the market to 51.1%.

Yesterday, yourmoney.com reported that Asda’s budget range had become so popular that the supermarket chain was having to set limits on a number of items.

Meanwhile, shoppers are “broadening the range of stores they visit”, with discount grocers “benefiting”.

Aldi’s sales rose by 18.7% over the 12 weeks to 4 September 2022, reaching a 9.3% market share, making it Britain’s fourth largest supermarket for the first time.

Lidl sales grew 20.9% with its market share increasing to 7.1%. Iceland also won market share in the latest period and its sales are 5.8% higher than in 2021.

Tesco, Sainsbury’s and Asda also had their best sales performance since April 2021. Tesco’s market share now stands at 26.9% following a 1.9% boost to sales, while Asda currently holds 14.1% of the market following 2.2% sales growth. Sainsbury’s accounts for 14.6% of the market.

Co-op held its 6.5% market share while securing a 2.7% increase in sales. Morrisons holds 9.1% of the market, Waitrose has a 4.7% overall share and online grocery specialist Ocado has 1.7% of the market.

McKevitt said: “Back at the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three quarters of the sector but that traditional big four is no more.

“The discounters have seen dramatic sales increases in recent months, bringing more and more customers through their doors. Aldi has done well to expand its shopper base, supported by consistent store openings, and with 14.2 million consumers visiting the grocer in the past three months.

“Meanwhile, for the fourth month in a row Lidl was the fastest growing grocer and recorded its strongest sales performance since October 2014.”

‘Low prices winning customers over’

Personal finance expert at Lendingexpert, David Beard, said: “Aldi has been nipping at the heels of the big four for many years, and it’s taken a cost-of-living crisis to overtake Morrisons. I’m not surprised by this as shoppers change their habits in favour of cheaper goods.

“It goes to show that promotions, loyalty cards and a wider choice aren’t what consumers want when facing rising costs. Low prices are clearly what’s winning customers over, which is further reflected in the other big three’s latest strategies of slashing prices – even stating in their promotions how their prices compare to Aldi.

“When Aldi first came to the UK in 1990, the discount grocer was shunned for its lack of choice, checkout methods, aesthetics and poor customer service. Little has changed since the first shop was opened both in look and feel, yet Aldi is now enjoying the fourth largest slice of market share, which is almost definitely a sign of the times.”