UK grocery price inflation eases; Ocado loses market share

UK grocery price inflation eases; Ocado loses market share

Grocery price inflation in the UK has experienced a notable slowdown, registering a decrease of just over two percentage points to 12.7% in the four weeks ending on August 6, marking the second most significant drop in prices in the last 15 years. This data comes from a survey conducted by Kantar, revealing that essential items like milk and vegetable oil have witnessed price reductions.

Simultaneously, take-home grocery sales saw a 6.5% increase compared to the previous year, marking a slowdown from the 10.4% annual rise reported a month earlier.

In a broader context, the longer 12-week period leading up to August 6 still showed grocery price inflation at 14.4%, with products like eggs, frozen potato items, and sugar confectionery displaying the fastest price escalations.

During this 12-week timeframe, total sales surged by 9.2% to £32.96 billion, a significant leap from the £30.17 billion reported in the same period the previous year.

Fraser McKevitt, Head of Retail and Consumer Insight at Kantar, commented on the market dynamics, saying, “Hopes of some sunshine were dashed this July as unseasonable weather put the dampeners on sales of our usual summer favourites. It was a better month for Barbie than barbecues this July as the rain put a spanner in the works for many consumers’ outdoor plans – a stark comparison to last year when we experienced the hottest day on record.”

Among the major players, the UK’s leading supermarket chains, Tesco PLC and J Sainsbury PLC, emerged as front-runners in the 12-week sales surge.

Tesco saw a notable sales increase of 9.5%, reaching £8.89 billion from £8.12 billion the previous year, thereby bolstering its market share from 26.9% to 27.0%.

Sainsbury’s also reported a 9.3% boost in sales, reaching £4.89 billion from £4.48 billion, with its market share holding steady at 14.8%.

However, the standout performers continued to be the German discounters, Aldi and Lidl.

Aldi witnessed a substantial 21% surge in sales, reaching £3.35 billion from £2.76 billion, propelling its market share to double digits at 10.2%, up from 9.1%. Lidl, on the other hand, experienced a 20% increase in sales, reaching £2.53 billion from £2.11 billion, pushing its market share to 7.7% from 7.0%.

In contrast, Asda’s sales growth was a modest 7.7%, and Morrison’s only saw a 2.3% increase. Consequently, Asda’s market share slipped from 13.9% to 13.7%, while Morrison’s went from 9.3% to 8.7%.

Ocado Retail, the online grocery venture between Ocado Group PLC and Marks & Spencer Group PLC, faced a similar fate with a meager 1.4% annual sales growth, leading to a drop in its market share from 1.8% to 1.7%.

Stock performance in response to this data was varied, with Tesco shares dipping 1.0%, Sainsbury’s down 0.5%, and Ocado experiencing an 0.8% decline. In contrast, M&S saw an impressive 8.5% increase in its share price, bolstered by separate announcements of expected profit growth in its full financial year and improved interim results.

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