Supermarket price inflation eases off, Sainsbury's lags rivals

Grocery price inflation eased off in recent weeks, according to two surveys of the sector released on Tuesday, which both found Sainsbury's was the slowest growing of the big four supermarkets.

Overall supermarket sales increased in value by 3.2% in the 12 weeks to 25 February compared to the same period last year, Kantar Worldpanel calculated.

For Kantar, grocery inflation was recorded at 2.9% for the 12 week period ending 25 February, down from 3.6% in the 12 weeks to 28 January. Prices were rising fastest in markets such as butter, fresh fish and fresh pork, and while growth was slowing overall, pries were actually falling in only a few markets, including ambient cooking sauces and laundry detergents.

A rival report from Nielsen survey noted that volumes improved in the four weeks to 24 February, but the amount shoppers spent fell back slightly last month, as inflation started to peak.

Year-on-year sales increased at the supermarkets by 1.8%, or 2.9% including the discounters, down from corresponding figures a month before of 2.7% and 4.2%.

“In contrast to non-food retailers, which are seeing weaker consumer demand than a year ago, grocery retailing continues to look positive,” says Mike Watkins, Nielsen’s UK head of retailer insight.

“Much of the credit goes to the grocery retailers who’ve displayed a great balancing act at not passing on too much of the increased supply chain costs to the end shopper. As a result, consumers in general don’t feel the need to hold back on grocery shopping.”

Over the twelve weeks ending 24 February, Tesco had the most improved year-on-year performance among the top four supermarkets, with sales up 3.1%, according to Nielsen, followed by Asda at 2.9%, Morrisons at 2.0% and Sainsbury with just 0.8%.

Kantar clocked both Tesco and Morrisons at 2.7%, though while Tesco lost some market share to the discounters, its Bradford-based rival clung onto its portion. Second-placed Sainsbury's grew sales at 1.1% while Asda grew at 2.3%.

Valentine’s Day and Chinese New Year saw couples and families choose to focus on other aspects of the day rather than cooking, with increased spending on ready meals. Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Over the month, sales of chilled ready meals which form part of a meal deal jumped by 26% as retailers offered customers the opportunity to wine and dine at home without the fuss, while Chinese ready meals also rose by more than a quarter.”

Online specialist Ocado grew sales 10.7% to grow its shares of the market to 1.2% from 1.1%.

Fastest growing of all was Aldi at 13.9% to a market share of 7%, while Lidl grew 13.3% and has a 5.1% share, which could see it overtake Waitrose's 5.2% in March.