Grocery price inflation slows only slightly as supermarkets offer fewer deals

30 January 2024 , 08:40

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The slowdown in food price inflation has stumbled (Image: PA Wire/PA Images)

Supermarket shoppers enjoyed fewer deals after Christmas as the slowdown in grocery price inflation stumbled, according to new figures.

Shopping data shows that grocery prices rose by 6.8% in January compared to the previous year, marking just a slight decrease from December's 6.9%. Purchases made on special offer accounted for 27% of all grocery spending in January, down from 32% in December when retailers were vying to attract customers.

Despite this dip, £500 million more was spent on deals this January than during the same month last year. Fraser McKevitt, head of retail and shopper insight at Kantar, said: "All eyes are back on inflation again after the Consumer Prices Index's (CPI) unexpected jump earlier in the month."

He added: "There's been a lot of speculation about the impact the Red Sea shipping crisis might have on the cost of goods, but the story in the grocery aisles this January is more about the battle between the supermarkets to offer best value, rather than geopolitics. Retailers have taken their foot off the promotions gas slightly as we've come into the new year, and that's meant inflation hasn't fallen as quickly."

Kantar's study showed that people are making more meals at home to save money, with 86 million more packed lunches taken to work last year. Booze spending dropped by over half compared to December, with nearly 6% of beer packs sold this month being no or low-alcohol options, up from 4% at the end of last year.

Shop prices 'are yet to peak and will remain high' as inflation hits new heights

Mr McKevitt noted: "Health always comes to the fore as a priority for consumers in January, but what's interesting this month is that we're not seeing as big a spike in health-related categories as we have done in previous years. That's because people are now buying more of the typical January 'health kick' items throughout the year 9% of annual own label plant-based sales were made in January in 2023, a steady decline compared with the 11% of sales in 2020."

Both Sainsbury's and Tesco saw their market share grow over the quarter compared to last year, with sales increasing by 8.1% and 6.3% respectively. Lidl was the fastest growing grocer in Britain for the fifth month in a row and the only retailer to see double-digit growth in the latest 12 weeks, with spending at the discounter up 11.9%. Aldi also outpaced the market, with sales rising by 7.2%.

* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]

Lawrence Matheson