Aldi has overtaken The Co-operative to become Britain’s fifth-largest supermarket chain.

The discount retailer’s sales rose 12.4% year on year against an overall 1.7% increase in grocery market sales, according to Kantar Worldpanel grocery market share figures for the 12 weeks ending 29 January 2017. 

This saw Aldi’s share of the market increase by 0.6 percentage points to 6.2%.

Just a decade ago, Aldi was the UK’s 10th-largest food retailer with a 2% share of the market, said Kantar Worldpanel retail and consumer insight head Fraser McKevitt.

“Since then the grocer has grown rapidly. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year,” he said.

Although overtaken by Aldi, Co-op grew ahead of the market at 2%, driven by a 7% increase in own-label sales.

Of the major retailers, Asda was the only one to record a drop in sales, with a 1.9% decline, leading to a loss of 0.6 points in market share (see table below).

Morrisons was the fastest-growing retailer, and saw sales rise 1.9% year on year. The retailer’s premium own-label performance was particularly strong, with its revamped The Best range making its way into 14% of Morrisons’ baskets.

Retail prices have continued to rise since the start of the year, pointed out Kantar, with inflation in the cost of a basket of everyday groceries climbing to 0.7%.

This followed a period of deflation from September 2014 to December 2016. 

Rising prices in markets such as butter, fish and tea have been offset by falling prices in categories including eggs, bacon and washing up products, said Kantar.

Bakery businesses including Premier Foods and Finsbury Foods are among food manufacturers to have warned that rising commodity costs are putting pressure on retail prices.