Kantar: Grocery inflation falls amid high comparables and increased promotional activity
Grocery inflation has fallen for the fourth month in a row, the latest stats from Kantar show, with the level of items bought on promotion rising by a quarter (25%) suggesting a change in retailer focus from the everyday low pricing model of the last few years.
The four weeks to 9 July 2023 saw the steepest decline of inflation since it’s peak in March this year, a welcome sign for households Kantar’s, head of retail and consumer insight Fraser McKevitt said but he warned that it was still “incredibly high”, at 14.9%, despite the 1.6 percentage point drop.
He noted “one of the biggest shifts” in retailers ramping up loyalty card deals such as Tesco’s Clubcard Prices and Sainsbury’s Nectar Prices, saying it could “signal a change in focus by the grocers who had been concentrating their efforts on everyday low pricing, particularly by offering more value own-label lines.”
However despite the contribution that promotional spending has had on bringing inflation down, it isn’t the only driver of change. “Prices were rising quickly last summer so this latest slowdown is partially down to current figures being compared with those higher rates one year ago,” he said.
Similarly shoppers have dramatically changed their behaviour to combat inflation by trading down to cheaper products and visiting different grocers, limiting the average annual increase in the last year to £330, more than half the £683 that was predicted through inflation.
Consumers are also visiting the supermarkets less often than they did before the pandemic but doing a bigger shop when there. “While some people may be shopping less often to manage spending, this is also linked to more people working from home. That has led to fewer opportunities to pop into the shop on the way to or from work,” McKevitt said.
Meanwhile, Ocado boss Tim Steiner said that the worst was “definitely over” for food price inflation, following the release of results that showed revenues up 5%, in part due to inflation, as shoppers made fewer orders and cut the size of their shops.