By James Davey
LONDON (Reuters) -British grocery inflation eased for a fourth month in a row in July, seeing its steepest decline since it peaked in March this year, industry data showed on Tuesday, providing a bit of relief for cash-strapped consumers suffering from high prices.
Market researcher Kantar said annual grocery inflation was 14.9% in the four weeks to July 9, falling 1.6 percentage points from the 16.5% in its June data set.
"That will be good news for many households although, of course, the rate is still incredibly high," Fraser McKevitt, head of retail and consumer insight at Kantar said.
Prices are rising fastest in foods such as eggs, cooking sauces and frozen potato products.
The Conservative government's key pledge to halve inflation in 2023 ahead of a probable election in 2024 has been undermined by stubbornly high food inflation.
Signs that it is abating are being closely watched by consumers, the Bank of England and lawmakers.
Last month, market leader Tesco (LON:TSCO) said food inflation had peaked and all of Britain's major grocers have cut the prices of some products in recent weeks. New reductions were announced by Iceland Foods on Tuesday.
Supermarket chains have had to defend themselves against claims they have profiteered from a cost of living crisis.
"Food inflation was driven by the global cost of energy rocketing and supply chains being hit," finance minister Jeremy Hunt said after the Kantar data was published.
"Yet consumers should share the upside as both issues unwind, and we’re watching closely to make sure they do. Hopefully that’s what we’re starting to see."
The Kantar data going into July provides the most up to date snapshot of UK grocery inflation.
Official data for overall UK inflation in June will be published on Wednesday. It was running at 8.7% in May - the highest rate among the world's big rich economies.
Kantar said that at the current level of grocery inflation, households would have spent 683 pounds ($893) more on their annual grocery bill to buy the same items as they did a year previously, but consumers have adapted their habits to limit this increase, whether by trading down to cheaper products or visiting different grocers.
It said the average annual increase to household spending over the past 12 months has actually been 330 pounds.
The researcher said UK grocery sales rose 10.4% over the four week period year-on-year on a value basis.
Over the 12 weeks to July 9 German owned discounters Aldi and Lidl were again the fastest growing grocers, with sales up 24.0% and 22.3% respectively, partly due to new store openings.
UK grocers' market share and sales growth (%)
Market share Market share % change in
12 wks to 12 wks to sales
July 9 2023 July 10 2022 (yr-on-yr)
Tesco 27.1 27.0 10.2
Sainsbury's 14.9 14.9 10.7
Asda 13.6 13.7 10.5
Aldi 10.2 9.1 24.0
Morrisons 8.7 9.4 2.5
Lidl 7.7 7.0 22.3
Co-operative 6.0 6.3 5.1
Waitrose 4.4 4.6 5.1
Iceland 2.3 2.3 8.9
Ocado (LON:OCDO) 1.7 1.8 2.0
Source: Kantar
($1 = 0.7649 pounds)