Healthy January for supermarket shoppers as grocery price inflation slows

Grocery price inflation defied predictions to slow in January to provide some relief for consumers, figures show.

Supermarket prices were 3.3% higher than a year ago in January, down from December’s jump of 3.7% – its highest level since March, according to analysts Kantar.

Supermarket promotions contributed to the slowing, and consumer spending on them rose year-on-year by £274 million, accounting for 27.2% of sales – the highest level in January since 2021.

Consumers also turned to non-branded products to keep costs down, with sales of own label items hitting a record high of 52.3% of sales in January.

Price rises

Prices rose fastest on products such as chocolate confectionery, chilled smoothies and juices, and butters and spreads, and fell fastest on cooking sauces, household paper products and cat food.

Meanwhile, the average shopper spent more than 10% of their grocery bill in January on fresh fruit, vegetables and salad, totalling £1.2 billion – £193 million more than in December.

Protein products including bars, bites and drinks boosted spending on sports nutrition, with sales for the category 47% higher than last year and more than two million households buying these items during the month.

Sales of low and no alcohol drinks were 7% higher than last January, and 6.7% of households bought at least one.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “It’s no surprise to see the low and no alcohol trend make its mark in January, but given some of the generational splits we have seen in grocery, it’s interesting that older shoppers are just as likely to take these products home as younger ones.

“Not everyone signed up for dry January though, with 49% of people buying an alcoholic drink this month – but this is a pretty big drop from December’s 76%.”

Supermarkets

Lidl’s sales rose 7.4% over the 12 weeks to January 26, making it three continual years of growth for the discounter, whose market share hit 7.2%, while Aldi’s sales were up 4.2% to increase its market share to 10.2%.

Ocado was the fastest-growing grocer for the ninth consecutive month, seeing spending grow by 11.3% to claim 1.9% of the market.

Marks & Spencer, the joint owner of Ocado Retail, also enjoyed a strong quarter, seeing grocery sales increasing by 10.5% in its brick-and-mortar stores.

Britain’s largest grocer Tesco gained the most share, its 28.5% hold of the market now 0.7% higher than this time last year, while it also saw its fastest rise in sales since April 2024 at 5.6%.

Sainsbury’s outpaced the market at 4.2% sales growth, increasing its share from 15.7 to 15.9%, and Co-op returned to growth with sales rising by 0.8% for a 5.2% share.

Waitrose saw sales climb by 3% on last January, and spending at frozen specialist Iceland was 1% higher.

However Asda suffered another woeful month, with sales down 5.2% year on year, although this slowed from December’s 5.8%.