Supermarket prices rise as cost of living mounts

Grocery inflation hit 3.8% in December, industry data showed on Tuesday, as the cost of living continued to mount.

According to retail consultancy Kantar, the latest four-week grocery price inflation now stands at 3.8%, a 0.3 percentage point rise from December.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: "Prices are rising on many fronts and the weekly shop is no exception. Like-for-like grocery price inflation, which assumes that shoppers buy exactly the same products this year as they did last year, increased again this month.

"Taken over the course of a 12-month period, this 3.8% rise in prices could add an extra £180 to the average household’s annual grocery bills."

McKevitt added that shoppers were now likely to start seeking out cheaper products and promotions. "Supermarkets that can offer the best value stand to win the biggest slice of spend," he noted.

Kantar said there had been a 3.8% fall in supermarket sales over the 12 weeks to 23 January, reflecting tough comparisons with January 2021, when the country was in lockdown. Spending remains 8% higher compared to the pre-pandemic period.

Online sales - which jumped during the first lockdown of 2021 - were down 15% year-on-year. However, digital orders now account for 12.5% of all grocery spend, almost double the pre-pandemic proportion.

McKevitt said: "Increasing confidence about heading out and about, combined with the return to the office, means we’re starting to see pre-pandemic shopper patterns once again.

"Basket sizes are now 10% smaller than this time last year, hitting their lowest level since the beginning of the ;pandemic, while footfall increased by 5% as every major retailer was busier in their stores."

Among individual retailers, only three recorded year-on-year growth, although every grocer saw year-on-two-year growth.

Discounters Aldi and Lidl both saw sales grow, ahead 1.1% and 1.2% respectively, while Ocado reported a 2.3% jump.

In contrast, Tesco saw sales ease 1.9%, J Sainsbury was down 4.8%, Asda was off 5.3% and Wm Morrisons saw a 8.5% decline. Waitrose, part of the John Lewis Partnership, was down 1.8%.

Tesco and Waitrose both increased market share, however. Tesco’s moved up to 27.9% from 27.3%, while Waitrose saw the greatest footfall of any supermarket, with its share of the market edging up 0.1 percentage point to 5.1%.

In contrast, Sainsbury’s had a 15.6% share, Asda 14.4% and Morrisons 9.9%.