Grocery price inflation eases as supermarkets promote discounts

In January 2025, the United Kingdom experienced a notable change in grocery price inflation, which slowed to 3.3%, down from December's 3.7%. This marked the first significant relief for consumers in months, as prices in supermarkets had been steadily rising throughout the previous year. Analysts from Kantar attributed this easing inflation to increased supermarket promotions and discounts that encouraged consumer spending, particularly in the own label product sector, which saw record sales of 52.3%. Consumers were actively seeking cheaper alternatives to manage their grocery budgets during this time. The monthly change also highlighted spending trends, with shoppers allocating more of their grocery budgets to fresh fruit, vegetables, and sports nutrition products. Sales soared for protein bars and drinks, with sales in this category reaching a year-on-year increase of 47%. Additionally, there was a growing trend in low and no alcohol drink purchases, indicating a cultural shift in consumer behavior. Despite the push towards healthier alternatives, nearly half of the population still purchased alcohol, although that figure had notably decreased from the previous month. In a competitive grocery landscape, Aldi and Lidl were identified as leading discounters. Both supermarkets maintained their positions as the cheapest options for consumers, with prices significantly below traditional retailers like Tesco and Asda. For those purchasing 100 grocery items, Aldi's costs averaged £185.83, while Lidl was slightly higher at £186.59. These appealing prices have made them attractive options for price-sensitive shoppers amid ongoing economic pressures. With such noteworthy shifts in the retail landscape, major chains like Tesco and Sainsbury's adapted to the competition by offering better deals on essential goods, leading to a mild increase in market shares for both. Meanwhile, retailers like Asda made headlines for substantial price cuts on thousands of products, which may have contributed to their regained competitive stance. Overall, the combination of strategic promotions, a shift toward private labels, and increased consumer engagement with discounts fueled a decline in grocery price inflation, offering hope to cash-strapped families in the UK.