Grocery deflation hits new low

Supermarkets
Grocery inflation is the lowest since records began in 2006
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Deflation has reached a new low of -1.6% in its 18th successive fall as the supermarket price war rages on. 

The figures from Kantar Worldpanel, published today for the 12 weeks ending 1 March 2015, reveal that shoppers have been saved £400m during the period as a result of lower general inflation and competitive prices, particularly on everyday staple items.

The figures follow Tesco’s strongest performance in 18 months with sales up 1.1% after a difficult 2014. Increasing sales have helped the supermarket slow its falling market share, which is down just a 0.1 percentage point compared with last year.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “This resurgence has impacted Asda, which competes for many of the same shoppers as Tesco. Asda’s sales are down by 2.1%, taking its market share to 17%. Morrisons and Sainsbury’s both grew behind the market average, with sales falling by 0.4% and 0.5% respectively.”

Aldi continues to grow “well ahead” of the market with sales up 19.3% on last year – this is its slowest rate of growth since June 2011, but still took the discounter to a new record market share of 5%. Fellow German discounter Lidl also performed well with growth of 13.6% increasing share to 3.5%.

Premium grocer Waitrose saw sales up by 4.9% in the latest period. It has implemented more promotions than it has done historically in an attempt to be more price-competitive and its market share has remained at its highest level of 5.2%, up 0.2 percentage points.

McKevitt said: “A combination of lower general inflation and the grocery price war has saved shoppers £400m in the past 12 weeks, with deflation driven to a record low of -1.6%. All of the major supermarkets are cutting prices to win shoppers, especially within everyday staples such as eggs, vegetables and milk. Retailers are focusing their efforts on simple price cuts rather than complicated ‘multibuy’ deals.”

Grocery inflation is at its lowest since Kantar Worldpanel began recording GPI in October 2006.

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