Grocery prices are finally showing signs of slowing down, but the financial burden on shoppers remains heavy. According to Worldpanel by Numerator, annual grocery inflation has eased to its slowest rate since December 2024, standing at 2.6% in the four weeks to July 12th. This is welcome news, but it's important to note that the cumulative cost of groceries continues to rise. The average household spent £5,530 on groceries over the past 12 months, up £156 from the previous year. This is a stark reminder that even as inflation cools, the weekly grocery bill keeps climbing.
What's particularly interesting is the impact of sporting fixtures and warm weather on shopping habits. England's run in the tournament had a clear effect on the drinks aisle, with beer sales rising 21% compared to the same days last year. This enthusiasm wasn't shared in Scotland and Wales, where the comparable rise was just 2%. Convenience stores also saw a boost, attracting an additional seven million trips compared to the same four weeks last year. This is likely due to shoppers making quick local runs, leading to increased sales of branded soft drinks, confectionery, and ice cream.
The Co-op is growing at its fastest rate since February 2021, with sales up 5.6% year on year. This is a significant turnaround after the retailer was hit by a major cyberattack last year. Ocado continues to be the fastest-growing grocer outright, with sales up 14.1% over the 12 weeks. Lidl, meanwhile, is the fastest-growing bricks-and-mortar operator, with sales up 8.6% over the four weeks and a market share of 8.8%.
However, it's worth noting that Morrisons has returned to share growth for the first time since May 2021, with a market share of 8.5% and sales up 3.5% year on year. Asda, on the other hand, remains the only major supermarket with falling sales, although the rate of decline has eased to 1.1%.
In my opinion, the grocery market is in a state of flux. While inflation is slowing, the cumulative cost of groceries continues to rise, putting pressure on shoppers. The impact of sporting fixtures and warm weather on shopping habits is also interesting, and it will be fascinating to see how this plays out in the coming months. One thing is clear: the grocery market is far from static, and retailers will need to adapt to changing consumer habits if they are to succeed in the future.
