Inflation drives Britain’s record Christmas grocery sales

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  • UK grocery sales up 9.4% to 12.8 bln stg in Dec -Kantar
  • Sales on volume basis down 1%, Kantar reports
  • UK grocery price inflation 14.4% in Dec -Kantar

By James Davey

LONDON, Jan 4 (Reuters) – British grocery sales rose 9.4% to a record 12.8 billion pounds ($15.3 billion) in the four weeks to Dec. 25, though growth was driven by price inflation rather than increased purchasing, market researcher Kantar said on Wednesday.

It said sales measured by volume, or the amount people bought, fell 1% year-on-year, showing the challenges shoppers are facing during a cost-of-living crisis.

“This story played out across the traditional Christmas categories. For example, value sales of mince pies soared by 19% but volume purchases barely increased at all,” said Fraser McKevitt, Kantar’s head of retail and consumer insight.

Kantar said grocery price inflation was 14.4% in December, down from 14.6% in November, with prices rising fastest in markets such as milk, dog food and frozen potato products.

“This is the second month in a row that grocery price inflation has fallen, raising hopes that the worst has now passed,” McKevitt said.

He noted that consumers continued to trade down to supermarkets’ own label products, with sales rising by 13.3%, well ahead of a 4.7% increase in branded lines.

Kantar said visits to supermarkets increased 5.2% year-on-year. Online grocery sales rose 4%, though its share of the market fell 0.6 percentage points to 11.6%.

Market leader Tesco , Sainsbury’s and Asda all delivered solid performances with sales on a value basis up 6.0%, 6.2% and 6.4% respectively over the 12 weeks to Dec. 25.

But German-owned discounters Aldi UK and Lidl GB remained the fastest growing chains with growth of 27.0% and 23.9% respectively, partly reflecting new store openings.

Morrisons and Waitrose were the laggards with sales falls of 2.9% and 0.7% respectively.

On Tuesday, Aldi itself reported a 26% increase in December sales.

Tesco and Sainsbury’s are due to update on Christmas trading next week.

Overall UK inflation is running at 10.7% and consumers face the prospect of a tighter squeeze in 2023, with higher taxes and mortgage rates and scaled-back government support on household energy bills.

UK grocers’ market share and sales growth (%)

Market share 12 wks to Dec. 25 2022Market share 12 wks to Dec. 26 2021% change in sales (yr-on-yr)
Tesco27.527.96.0
Sainsbury’s15.515.76.2
Asda14.014.26.4
Aldi9.17.727.0
Morrisons9.110.1-2.9
Lidl7.26.323.9
Co-operative5.65.84.3
Waitrose4.75.1-0.7
Iceland2.52.410.2
Ocado1.71.78.2

Source: Kantar

($1 = 0.8345 pounds)

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