UK grocery inflation has slowed for the first time in six months, offering a measure of respite to households grappling with persistent cost-of-living pressures.
According to the latest data from Kantar, supermarket prices rose 3.3% in January, down from 3.7% in December. Toilet roll and cat food costs dipped, while chocolate, butter and chilled juices edged higher.
Analysts suggest that intense competition among retailers has helped bring inflation down, as promotions surged to their highest level in four years. More than a quarter of all sales—27.2%—in the four weeks to 26 January were on discounted items, up 9.4% on the wider market. Kantar’s head of retail and consumer insight, Fraser McKevitt, said: “Supermarkets were dishing out the discounts this new year, and consumers responded. Spending on promotions rose year on year by £274m.”
Meanwhile, own-label ranges—particularly premium lines—reached a record high of 52.3% of overall supermarket sales. Consumer demand for budget-conscious and higher-quality alternatives contributed to the shift in buying patterns over the festive period and into the new year.
Official data showed overall UK inflation easing to 2.5% in December, down from 2.6% in November, heightening expectations that the Bank of England could cut its base rate from 4.75%. Grocery sales, however, increased by only 2.8%, lagging behind inflation—a sign that shoppers may be picking up fewer or cheaper items as they balance their budgets.
Among individual supermarkets, Lidl recorded the fastest growth, with sales up 7.4%, while Asda was the only major chain to see its sales decline by 5.2%. Tesco, the UK’s largest supermarket, benefited from rival weakness, increasing its market share to 28.5%. Online grocer Ocado retained its title as the fastest-growing retailer for the ninth consecutive month, up 11.3%, and co-owner Marks & Spencer also put in a robust performance, with store sales rising by 10.5%.
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Grocery inflation eases as supermarkets ramp up promotions for savvy shoppers
