Heavy discounting by supermarkets means the grocery market has been pushed into deflation, according to the latest figures.

Kantar Worldpanel said like-for-like grocery prices at supermarkets dropped by 0.2% in the 12 weeks to 12 October – meaning shoppers pay less for a basket than they did in the same period of 2012.

The news about prices came as the consumer insight company also revealed German discounter Aldi had seen its sales increase by 27.3%, despite its market share slowing to 4.8%.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “While the supermarkets are battling it out on price, the real winners are consumers. Extensive price cutting by some supermarkets in a bid to win the price war means that customers are saving on everyday items, such as vegetables and milk.

“We are seeing clear polarisation of the market, with both the premium and discount ends of the market gaining share, while the mainstream grocers continue to be squeezed in the middle.”

Waitrose secured a record grocery market share of 5.2% and boosted its sales by 6.8% over the past year. It has continuously grown its sales every month since March 2009.

Lidl’s sales grew by 18%, with its market share standing at 3.5%.