UK grocery inflation slows for first time in six months amid rise in promotions | Supermarkets

Grocery inflation slowed in January – for the first time in six months – as retailers ramped up promotions to attract budget-conscious shoppers.

The price of groceries increased by 3.3%, easing from 3.7% in December, as the costs of toilet roll and cat food fell but those of chocolate, butter and chilled juices rose, according to analysts at Kantar.

The figure is a drop of potentially good news for the government, as the pace of price rises on food as been one element underpinning persistent inflation in the UK, putting pressure on households’ disposable income.

Grocery inflation has increased every month since August, when it was 1.7% according to Kantar, but it is still well below the double-digit figures recorded in 2023.

Kantar said more than a quarter of sales – 27.2% – had been items on promotion in the four weeks to 26 January, the highest level in four years. Spending on discounted items rose by 9.4%, well ahead of the wider market.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “Supermarkets were dishing out the discounts this New Year, and consumers responded. Spending on promotions rose year on year by £274m.”

He said spending on supermarkets’ own-label products also rose, by 5.4%, to a record high of 52.3% of sales, helped by shoppers buying premium own-label products for New Year’s Eve celebrations.

Overall UK inflation eased to 2.5% in December, below a reading of 2.6% in November, according to figures released last month that increased expectations that the Bank of England will cut rates from 4.75% on Thursday.

Grocery sales increased by 2.8%, slightly behind inflation, indicating that people bought fewer items or took cheaper options.

Lidl was the fastest-growing supermarket, with sales up 7.4% in the three months to 26 January. Asda, the UK’s third largest supermarket, continued to struggle, with sales down 5.2% – the only big chain at which sales fell.

Its weakness helped rival Tesco, the UK’s biggest supermarket, increase its share of the market to 28.5% – making it the biggest market share gainer – as sales rose 5.6%.

Ocado was the fastest-growing grocer for the ninth consecutive month. Spending at the online retailer grew by 11.3%. Its co-owner Marks & Spencer, the premium grocer, also continued its strong run as sales increased by 10.5% in its physical stores.