Food inflation in the UK has “stalled” after showing signs of coming down as the weakness of sterling has pushed up the prices of produce and imported foodstuffs, according to figures published today (3 February) by TNS.
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Food prices rose by 8.4% year-on-year during the 12 weeks to 25 January, TNS said. During the 12 weeks to 28 December, food inflation stood at 8.3% – what was then the third successive drop since a peak of 9.3% seen in October.
“While a continuation of the falling trend may have been expected, sterling’s decline has adversely affected produce and imported foodstuff prices,” TNS director of research Ed Garner said.
The analysts said there were “clear signs” that UK consumers were trading down between retailers or within a retailer’s own-label portfolio – from premium private-label products to value ranges – as the downturn continues to hit spending.
TNS said the UK grocery market as a whole grew by 6.4%, although Tesco’s share of the market fell by 0.5% on the year to 30.7%.
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By GlobalData“This is a reflection of [Tesco’s] shoppers switching a lot of their spend out of Finest and into Value and Tesco Discount brands,” Garner said.
Asda and Morrisons lifted their shares of the market after seeing sales growth of 8.1% and 9.7% respectively.
Garner said the retailers’ value proposition continued to resonate with consumers wary of the economic downturn.
“To a degree, they have not altered their central value-for-money proposition in the recession, it’s the market that has changed around them,” he said.
Aldi, meanwhile, saw its sales jump 24.1% on the year; rival discounter Lidl enjoyed growth of 11%. Aldi now accounts for 3% of UK grocery sales, while Lidl has a market share of 2.3%.
