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Supermarket inflation in Britain remained at nearly 5 per cent this month, as shoppers saw prices rise fastest for chocolate, fresh meat and butter or spreads. Prices were 4.9 per cent higher than a year ago in the four weeks to 7 September, according to market research firm Worldpanel by Numerator.
Grocery inflation is running ahead of the UK’s overall Consumer Prices Index inflation rate which currently stands at 3.8 per cent, according to the Office for National Statistics. However, the figure revealed today was slightly down from August’s 5.0 per cent grocery inflation and July’s 5.2 per cent, which was the highest level since January 2024.
Experts noted that prices were falling for some products, with the biggest recent drops seen among household paper, sugar confectionery and dog food. But the current rate is more than three times the figure of 1.6 per cent in July last year, when the new Labour government took over from the Conservatives. Fraser McKevitt, head of retail and consumer insight at Worldpanel, said: ‘Prices might not be climbing quite as quickly, but they’re still on the rise and the battle between own label lines and brands continues as household finances remain tight.’ He pointed out that supermarkets’ own lines now make up 51.2 per cent of all sales, up from 50.9 per cent a year ago.
Sales of these products grew by 5.9 per cent in the most recent period, just ahead of brands at 5.3 per cent. Data from Worldpanel, formerly known as Kantar, also found take-home sales at the supermarkets grew by 4.8 per cent in the four weeks to September 7 versus last year. Mr McKevitt added: ‘It’s the premium own label goods which are the real standout performers. Sales rose by an impressive 10.3 per cent making it six months in a row that they’ve increased by double digits. ‘However, brands are holding ground in some categories, including toothbrushes, frozen chicken and baby toiletries, showing that consumers still value well-known names across some very different parts of the store.’
Autumn signalled a return to work and school for many households, impacting what shoppers purchased at the supermarket. Mr McKevitt said: ‘People often start with good intentions and our data shows that this period is the most popular point in the academic year to bring a packed lunch to school.’ He told how in the two weeks to September 7, sales of lunchbox staples shot up among families with children compared to the previous fortnight. Spending on yogurt rose by 26 per cent, sliced cooked meats by 17 per cent and cheddar cheese by 24 per cent.
But he said that while sandwiches feature in more than half of children’s lunchboxes, options such as cooked poultry are also becoming more popular. While the overall childrenswear market for back-to-school dipped slightly over the summer, grocery retailers grew ahead of the market at 8.4 per cent Mr McKevitt said: ‘The grocers clearly did their homework on back-to-school fashion. Value is still at the front of shoppers’ minds, and retailers have tapped into this. ‘Average prices have fallen, and buyers have increased their basket sizes as they aim to make the most of the discounts on the table.’
The firm’s data also showed families are turning to the second-hand market in search of deals, with pre-worn clothes making up 13.1 per cent of schoolwear being bought by shoppers. As for the supermarkets individually, Tesco won more market share than any other grocer in the 12 weeks to September 7, now accounting for 28.4 per cent of all sales, up 0.8 percentage points compared to a year ago. Britain’s biggest supermarket saw growth across all channels, with spending up 7.7 per cent – its highest rate since December 2023. Ocado was again the fastest growing retailer, with sales rising by 11.9 per cent. It outpaced the wider online market which was up by 8.2 per cent over the 12 weeks.
At Sainsbury’s, spending through the tills increased by 5.4 per cent, taking its portion market share up to 15.1 per cent. Lidl was the fastest growing bricks and mortar retailer with sales up 11.0 per cent – increasing its share to 8.2 per cent, up from 7.8 per cent in 2024. Fellow German discounter Aldi held its 10.7 per cent share with spending increasing by 4.7 per cent. Morrisons has 8.4 per cent, while Asda has 11.8 per cent. Take-home sales at Iceland grew by 4.7 per cent with its share remaining at 2.3 per cent, while Co-op has 5.4 per cent of the market.
Waitrose’s share sits at 4.4 per cent, with spending up by 4.3 per cent; and sales of groceries at Marks & Spencer was 5.9 per cent higher than a year ago. It comes after the Food and Drink Federation said yesterday that food bills could spike at Christmas because of the extra costs that Labour is heaping on businesses. Food and drink inflation could reach 5.7 per cent by the end of the year, the industry body said, pointing to the effects of Rachel Reeves’ National Insurance raid and new packaging taxes.
Meanwhile, the boss of Aldi highlighted ‘persistent and urgent’ pressures on shoppers and warned of ‘ripple effects’ of more costs on business. The grim messages come as the Government pushes forward with its employment rights overhaul. Sir Keir Starmer has indicated he will ignore pleas to ease the proposals, which would give workers ‘day one’ rights to statutory sick pay and protection from unfair dismissal, as well as loosening strike rules. The Tories have estimated that the measures will add £154 to employers’ costs for every worker hired, on top of the £800 annual cost of the NI increase.
