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TOP NEWS: UK grocery inflation spikes; Aldi and Lidl gain traction

28th Feb 2023 09:54

(Alliance News) - UK grocery price inflation spiked to another record high earlier in February, while German discount supermarkets continued to make market share gains, numbers from Kantar showed on Tuesday.

According to Kantar, grocery price inflation hit 17.1% in the four weeks to February 19. It is the hottest-ever grocery price inflation rate recorded by Kantar.

"Our latest research shows that grocery price inflation is the second most important financial issue for the public behind energy costs, with two-thirds of people concerned by food and drink prices, above public sector strikes and climate change. One quarter say they're struggling financially, versus one in five this time last year. The numbers speak for themselves. If people don't change how they buy their groceries, households are facing an GBP811 increase to their average annual bill," Kantar analyst Fraser McKevitt commented.

Over the four-week period, grocery price sales rose 8.8%. For the wider 12 weeks of the survey, sales were 8.1% higher at GBP33.64 billion, from GBP31.12 billion a year prior.

Tesco PLC sales rose 6.6% to GBP9.19 billion during the 12 weeks, from GBP8.62 billion. Its market share decreased, however, to 27.3% from 27.7%.

J Sainsbury PLC sales rose 6.2% to GBP5.12 billion from GBP4.82 billion, though like Tesco, its market share faded. Sainsbury's had a 15.2% share of the UK grocery market during the 12 weeks, down from 15.5%.

Fellow London listing Ocado PLC's sales surged 11% to GBP628 million from GBP564 million. Its market share edged up to 1.9% from 1.8%.

By sales, Aldi was the fastest-growing grocer. Sales surged 27% to GBP3.16 billion, helping its market share rise to 9.4% from 8.0%. Lidl sales were 25% higher at GBP2.39 billion, with its market share rising to 7.1% from 6.1%.

Elsewhere, Wm Morrison Supermarkets suffered a market share decline to 9.0% from 9.8%. Waitrose's fell to 4.7% from 5.0%. Co-op's declined to 5.5% from 5.7%, while Iceland's edged up to 2.4% from 2.3%.

Kantar's McKevitt said consumers are on the hunt for value as cost of living pressure intensifies.

"The battle to offer best value for consumers continues in this intensely competitive sector, particularly as the traditional retailers look to protect market share from the discounters. Own label ranges have been one obvious focus and shoppers have consistently bought them over brands since February last year. Sales of these lines are up by 13% this month, well ahead of branded products at 4.6%, a trend that shows little sign of stopping," McKevitt explained.

There was a Valentine's Day boost for grocers, however, with frugal consumers preferring to stay at home rather than spending at restaurants.

"Supermarket sales of steak rose by a quarter in the seven days to 14 February compared to the previous week, while chilled ready meal sales were nearly one third higher. Sparkling wine sales also doubled, and an additional GBP5 million was spent on boxed chocolates. Illness – a Valentine's gift nobody wants – could also have encouraged at-home celebrations, as sales of cold treatments rose by 82%, cough liquids by 78% and cough lozenges by 70% this month," McKevitt added.

Recently, supermarkets have limited sales of certain products, including tomatoes and salad vegetables.

On Monday, UK food minister Mark Spencer summoned supermarket chiefs to explain "what they are doing to get shelves stocked again" amid shortages of fresh fruit and vegetables.

McKevitt added: "Though not captured in this data set, we'll be closely following the impact of these shortages on sales in the coming weeks. While 43% of all grocery baskets contain at least one fresh produce item, pack limits are unlikely to drastically affect consumers as we usually buy fruit and veg in smaller quantities. For instance, only 1% of tomato purchases last year involved more than three packs."

During morning trade in London, Tesco PLC shares were down 0.4%, Sainsbury's fell 0.9% while Ocado shed 10%. The latter also posted annual results, showing a swing to loss.

By Eric Cunha, Alliance News news editor

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