According to Kantar, UK grocery price inflation has hit a new two-year low at 4.5% in March 2024, offering some respite to consumers facing financial challenges. Despite this positive trend, a quarter of British households continue to struggle financially, turning to budget groceries and promotions to manage expenses. Sales of branded and premium own-label goods are on the rise, indicating a shift in purchasing priorities amid economic uncertainties.
UK grocery price inflation has dropped to a new two-year low of 4.5% as of March 2024, presenting a significant decrease in the cost of supermarket prices compared to the previous year, according to analyses by Kantar. Despite this downward trend in inflation, approximately a quarter of British households continue to experience financial difficulties, with the situation remaining unchanged since November last year. Retail researchers have indicated that a significant portion of these households are adopting strategies such as choosing cheaper groceries and taking advantage of promotions to alleviate their financial burden.
Sales of branded goods have seen an uptick, surpassing sales of own-label products. Notably, premium own-label lines have recorded a swift growth of 16.1%, the most rapid increase in nearly three years as reported by Kantar. This growth underscores a shift in consumer purchasing behavior towards higher quality own-label products amidst economic uncertainties.
The research also highlighted that consumers are indulging in Easter treats, with spending up by £88 million in the first three months of this year compared to the same period last year. Additionally, sales of hot cross buns have increased by 15%.
In the retail sector, online retailer Ocado showcased a significant performance, leading as the fastest-growing retailer in March with a sales increase of 9.5% over the past 12 weeks, reaching £645.3 million for the 13 weeks to March 2, driven by price cuts and the expansion of product ranges. Despite challenges including a payment dispute with Marks & Spencer and a slight decrease in basket sizes, Ocado has seen a 6.4% increase in its active customer base, totaling 1.02 million. The company remains optimistic about its future, adhering to a strategy focused on volume growth amidst market fluctuations.
Other supermarkets like Tesco and Sainsbury’s also reported positive sales growth, with year-on-year increases of 5.8% and 6.7% respectively, solidifying their market positions. This development in the grocery sector reflects the evolving consumer spending habits and the resilience of the British consumer in navigating through financial challenges.
