Grocery price inflation has fallen to the lowest in over two and a half years, but shoppers' behaviour has not noticeably been affected yet, new research from Kantar suggests.
Supermarket inflation dropped for the fifteenth month in a row to 2.4% for the four weeks to 12 May, the lowest level since October 2021, the report out this morning said.
"Grocery price inflation is gradually returning to what we would consider more normal levels," said Fraser McKevitt, head of retail and consumer insight at Kantar.
He said inflation is now only 0.8 percentage points higher than the average in the decade up to 2021, which was just before prices began to climb after the invasion of Ukraine.
"Typically, an inflation rate of around 3% is when we start to see marked changes in consumers’ behaviour, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops," McKevitt said.
"However, after nearly two and a half years of rapidly rising prices, it could take a bit longer for shoppers to unwind the habits they have learnt to help them manage the cost of living crisis."
He said sales of supermarkets' own-brand products were proving resilient and growing faster than big brands to make up over half of total spending, with premium own-label sales increasing too, up 9.9% on a year ago.
Total take-home grocery sales in the four week period were up 2.9% or 5.4% over 12 weeks, Kantar's research found, with the fastest growing retailer again being Ocado Retail, the joint venture between Ocado Group PLC (LSE:OCDO) and Marks and Spencer Group PLC (LSE:MKS).
Ocado sales rose 12.4% over the 12-week period, followed by Lidl as second fastest with 9.4% growth to take the German discounter to a new record-high market share of 8.1%.
Tesco PLC (LSE:TSCO) and J Sainsbury PLC both increased market share.
Tesco's 27.6% market share was up 0.5 percentage points since last year, which Kantar said was its largest annual share gain in 16 months.
Its 5.6% growth in sales was matched by Sainsbury’s, whose market share nudged up 0.3 percentage points to 15.1%.
Asda sales were down 2% and it holds 13.1% of the grocery market, down from 13.9% a year ago.