British grocery price inflation declined at a slower rate in January as the proportion of items purchased on promotion dropped compared to December, industry data showed on Tuesday.
Market researcher Kantar said annual grocery price inflation was 6.8% in the four weeks to Jan. 21, down from a re-stated 6.9% in the previous four-week period.
The softer decline in January compares with a 2.2 percentage point decrease seen between November and December 2023.
Fraser McKevitt, head of retail and consumer insight at Kantar, said although there's been speculation about the impact the disruption to Red Sea shipping might have on the cost of goods, the story in grocery was more about the battle between supermarkets to offer the best value, rather than geopolitics.
"Retailers have taken their foot off the promotions gas slightly as we’ve come into the new year, and that’s meant inflation hasn’t fallen as quickly," he said. McKevitt noted that items bought on promotion accounted for 27% of grocery spending in January versus 32% in December.
Last week, researcher IGD said UK food and drink prices would continue to rise in 2024.
However, separate data from the British Retail Consortium on Tuesday showed overall prices in UK shops rose at the slowest annual pace since May 2022 this month, adding to signs of easing inflation pressures ahead of this week's Bank of England policy decision.
Kantar said total take-home grocery sales grew in value by 2.9% over the four weeks year-on-year, a slowdown from December's growth of 7.0%.
Discounter Lidl was again the fastest growing grocer over the 12 weeks to Jan. 21 with sales up 11.9%, followed by Sainsbury's on 8.1%, discounter Aldi on 7.2% and market leader Tesco on 6.3%.
Asda and Morrisons were again the laggards with sales growth of 2.1% and 2.8% respectively.
This article was written by James Davey; Editing by Kate Holton and Louise Heavens from Reuters and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.