U.K. grocery inflation dropped to its lowest level in more than a year, but consumers said they remain concerned about the prices they are paying for food, as well as the economy overall.
Grocery price inflation declined from 12.7 percent in July to 12.2 percent in August, according to the latest data from Kantar. In response, take-home sales from all grocery chains rose by 7.4 percent compared with the same period in 2022.
August followed the ongoing six-month trend of falling grocery prices, but 12.2 percent is still not “a number to celebrate for many households,” Kantar Head of Retail and Consumer Insight Fraser McKevitt said in a press release.
“Our data shows that 95 percent of consumers are still worried about the impact of rising grocery prices, matched only by their concern about energy bills,” McKevitt said. “After a full year of double-digit grocery inflation, it’s no surprise that just under a quarter of the population consider themselves to be struggling financially – although this is a very slight drop compared to May.”
To help cash-strapped customers, U.K. grocery chains are continuing to lower prices. Notably, Waitrose confirmed it is slashing prices by an average of 10 percent on 50 popular autumn products, including pasta, sausage, potatoes, and whole chickens.
At the same time, Waitrose plans to maintain its high-quality standards, including sourcing sustainable seafood.
“Giving our customers good value for money is a priority, and we continue to work hard to keep our prices low while maintaining our quality and supporting our fantastic farmers,” Waitrose Commercial Director Charlotte Di Cello said. “We’ll continue to deliver our market-leading quality, using our outdoor-bred pork, responsibly sourced fish, higher-welfare chicken, and LEAF [Linking Environment and Farming] Marque-certified British fruits and vegetables.”
Waitrose’s growth spiked 5.6 percent in August, giving the retailer a 4.6 percent share of the U.K. grocery market.
Di Cello said Waitrose has begun passing on savings from falling food costs to its customers.
“We’ve already lowered the prices of dairy products, household goods like toilet paper, and canned vegetables as a result of inflation falling on those items,” Di Cello said.
Earlier this year, Tesco also instituted measures to pass savings onto concerned U.K. consumers, calling on its suppliers to lower prices. It said in July the market is moving from “inflation to deflation,” and it wants to get out in front of rival supermarkets by cutting prices more aggressively.
Sainsbury’s and Tesco were the fastest-growing traditional retailers in the U.K. in August, recording 9.1 percent and 9.3 percent increases in sales, respectively.
Discount grocery chains Aldi and Lidl have continued to benefit from inflation and pricing concerns over the past year. Aldi’s U.K. sales soared 17 percent in August compared to the previous year, and Lidl’s sales rose 16 percent.
“We’re now marking one year since Aldi became the fourth-largest supermarket in Britain, and alongside Lidl, it has made some of the biggest market share gains over the past 12 months as consumers continue their hunt for value,” McKevitt said.
The two discounters now account for 17.7 percent of all grocery sales in the country.
“We expect this performance to continue as inflation remains stubbornly high; However, growth rates for both the discounters have been slowing in recent months as they annualize against rapid rises last year,” McKevitt said.
After Aldi opened its thousandth store in the U.K. on 7 September, the company committed to a new long-term target of operating 1,500 stores across the country.
“Our popularity is growing, and there is a huge demand for people to have an Aldi store near them to increase [their] access to our unbeatable prices,” Aldi U.K. and Ireland CEO Giles Hurley said. “The next phase of our expansion will involve another 500 new stores over the coming years. It is a long-term target and [does not represent] a ceiling to our ambition to have an Aldi store close to everyone in the U.K.”
Further demonstrating shoppers’ search for value, own-label sales increased by 9.9 percent in August and comprise more than half of everything Britons buy, according to McKevitt.
“This is equivalent to a GBP 3 billion [USD 3.69 billion, EUR 3.46 billion] shift in sales away from brand [names],” McKevitt noted.
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