Food price inflation has fallen further and in the four weeks to 1 October prices across supermarkets is 11% higher compared to a year ago.
Analysts at Kantar said that this is the seventh consecutive fall in price rises since March during its peak at 17.5% and the latest fall has been helped food items are being purchased on offer which increased by 26.5% in the past 12 weeks.
Kantar said that Tesco has been driving an increase in promotions which led to sales increase by 9.2% and their market share has slightly moved up by 0.4 percentage points to 27.4%.
Tom Steel, strategic insight director at Kantar, said, “Grocery price inflation is still very high, but shoppers will be relieved to see the rate continuing to fall.
“For the first time since last year, the prices of some staple foods are now dropping and that’s helping to bring down the wider inflation rate. Dairy was one of the categories where costs really shot up last autumn but the average price paid for a 250g pack of butter is now 16 pence less than 12 months ago.”
Sachin Jangam, Partner for Retail at Infosys Consulting said, “With food inflation falling for a seventh month in a row, we’ll start to see more grocers able to pass these lower costs onto consumers.
“And while a potential recession means the most difficult months could still lie ahead, grocers tend to do quite well during these periods, with consumers more likely to entertain themselves at home rather than dine out.
“Loyalty card pricing has been the biggest change for UK grocers in the past couple of years, and will remain key to their future success.
“So too will store assortment shifts, including physical store-friendly categories and stocking more wholesale and large pack sizes to fend off competition from stores like Costco.
“On the flipside, convenience will also continue to gain momentum – smaller basket sizes and more regular shopping from consumers, particularly as food costs come down.
“Most important of all will be the business shift to subscription models, which could change UK retail grocery market share.
“This would allow more digitally minded consumers to receive monthly products and the latest deals at home, helping cement customer loyalty even further.”