Grocery inflation surges to 16.7%

According to retail consultancy Kantar, grocery price inflation hit 16.7% in the four weeks to 22 January, the highest level since its records began in 2008. In the 12 weeks to 22 January, it reached 14.8%, with prices jumping fastest in markets such as milk, eggs and dog food.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: "Late last year we saw the rate dip slightly, but that small sign of relief for consumers has been short-lived.

"Grocery price inflation jumped by a staggering 2.3 percentage points this month. Households will now face an extra £788 on their annual shopping bills if they don’t change their behaviour to cut costs."

With prices soaring, Kantar said customers were increasingly seeking out cheaper alternatives. Sales of own-label lines rose 9.3% while branded alternatives where ahead just 1.0%.

Overall take-home grocery sales rose by 5.7% in the four weeks to 22 January and by 7.6% over the 12 weeks.

Discounter Aldi - which along with German rival Lidl is expanding rapidly in the UK - was the fastest-growing grocer in January, with sales up 26.9% year-on-year, giving it a 9.2% market share. Lidl has a market share of 7.1% after sales jumped 24.1%.

Among the bigger grocers, Tesco - the UK’s largest by market share, at 27.5% - saw sales increase 6%. Sales rose 6.1% at J Sainsbury and by 6% at Asda, but fell 1.9% at Wm Morrison, as the discounters continued to bite.

Ocado Group reported a 7.6% increase in sales year-on-year, giving it a 1.8% market share.

McKevitt added: "Competition in the British grocery sector is as intense as it’s ever been as retailers strive to retain shoppers.

"Across the market the move is towards everyday low pricing, with many supermarkets offering price matching and using their loyalty schemes to help shoppers save."

Victoria Scholar, head of investment at Interactive Investor, said: "Although the UK’s headline inflation rate has been easing, price pressures remain sky high for groceries, an essential spend that is hard to trim, highlighting the ongoing cost of living pressures which are negatively impacting those at the lower end of the income spectrum disproportionately."