Food price inflation eased to almost a two-year low in February as grocery chains waged a fierce battle to impress shoppers with price cuts, according to two measures of shop prices.
Grocery price inflation dropped to 5.3% in February from 6.9% a month earlier, according to research by Kantar, reaching the lowest rate since March 2022.
Earlier, the British Retail Consortium said food price inflation had reached its lowest since May 2022.
Food prices rose 5% on last year, easing from the 6.1% inflation in January and the lowest since May 2022, according to the British Retail Consortium (BRC) shop price index.
Compared to January, food prices fell 0.1% in February, the first decline since last September, which the BRC said reflected falls in energy and fertiliser prices, along with fierce competition from retailers.
Promotional activity accelerated this month after retailers had reduced offers in the first weeks post-Christmas.
“Though there’s been lots of discussion about the impact the Red Sea shipping crisis might have on the cost of goods, supermarkets have been pulling out all the stops to keep prices down,” said Kantar strategic insight director Tom Steel.
He noted that Morrisons joined rivals in launching schemes to price match with Aldi and Lidl, following Asda’s move in January.
Meanwhile, the BRC shop price index showed food prices rose 5% in February compared to a year earlier, easing from the 6.1% inflation in January and the lowest since May 2022.
Compared to January, food prices fell 0.1% in February, the first decline since last September.
“This was driven by easing input costs for energy and fertiliser while retailers competed fiercely to keep prices down,” said BRC chief Helen Dickinson.
Supermarket winners
In terms of supermarket performance, Sainsbury’s and Iceland were the only two chains to attract more shoppers through their doors, Kantar found.
Fastest growth was again recorded by Lidl, with sales up 10.9% over the 12 weeks to 18 February 2024, making it the fastest growing grocer for the sixth month running and giving it a 7.5% share of the market.
Fellow German-owned discounter Aldi also outpaced the wider market, with sales climbing 5.7% for a 9.4% market share.
Among the listed supermarkets, J Sainsbury PLC (LSE:SBRY) grew fastest, increasing its share of the market by 0.4 percentage points to 15.6% with a 7.6% increase in sales.
Tesco PLC (LSE:TSCO) grew 6.2% and its market share swelled 0.3 to 27.6%.
Alcohol sales volumes rebounded 18% on the previous month after the end of dry January.
Shopper topped up their trolleys with 28% more wine and 16% more beer and lager.