Grocery price inflation in the UK has slowed to a two-year low as fierce competition among supermarkets offset the impact of the Red Sea shipping crisis on goods prices.
In a boost to households, supermarket prices were 5.3% higher than a year earlier in February, the lowest rate since March 2022 and down from January’s 6.8%, according to the analyst Kantar. Grocery sales grew by 5.1% in the four weeks to 18 February.
Tom Steel, the strategic insight director at Kantar, said: “Things are looking up for shoppers this February. Consumers have been navigating a grocery inflation rate of more than 4% for two years now, so this latest easing of price rises is especially welcome.
“Though there’s been lots of discussion about the impact the Red Sea shipping crisis might have on the cost of goods, supermarkets have been pulling out all the stops to keep prices down and help people manage their budgets.”
A separate report from the British Retail Consortium showed food inflation fell to 5% in February from 6.1% in January, amid tumbling energy costs and a supermarket price war.
As the price war intensified among retailers, Morrison’s became the latest retailer to launch a price match scheme with Aldi and Lidl, after Asda made the move in January.
Promotions picked up again after a post-Christmas slowdown, and consumers spent £586m more on them than in February last year, up 4%, according to Kantar. Sainsbury’s and Iceland were the only retailers to attract more shoppers through their doors.
People celebrated Valentine’s Day by spending 12% more on steak and 16% more on boxed chocolate than last year.
But they were on the hunt for value, spending £36m on meal deals costing £10 or more in the week leading up to 14 February. This figure is slightly down on 2023 when spend hit £43m, but that was because consumers chose to make more savings this year through price cuts, Kantar said. Sales of chilled ready meals and desserts on promotion did particularly well this year.
As “Dry January” ended, alcohol sales volumes jumped by 18% on the previous month, with consumers buying 28% more wine and 16% more beer and lager. Red wine was particularly popular, with 8m more bottles bought this month than in January.
Lidl was the only retailer to achieve double-digit growth: its sales rose by 10.9% over the 12 weeks to 18 February, making it the fastest-growing grocer for the sixth month running. It increased its share of the market to 7.5%.
Its fellow discounter Aldi also grew faster than the overall market, with sales up by 5.7%, maintaining its 9.4% share.
Sainsbury’s and Tesco, Britain’s largest grocer, increased their share of the market, as their sales grew by 7.6% and 6.2% respectively.
