Grocery price inflation drops to record lows

The seemingly unstoppable rise of discounters such as Aldi, Lidl and the Pound/99p shops, coupled with competitive pricing of staple items like milk and bread has driven inflation to the lowest level since October 2006, according to new figures from researcher Kantar Worldpanel.

Kantar’s figures show that grocery price inflation has fallen for the tenth consecutive period and now stands at 0.4% – the lowest level since measurements began. As a result, overall market growth has fallen to 0.9% – the lowest figure for 10 years.

The figures reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in major categories such as bread, milk and vegetables. Aldi is also now poised to overtake Waitrose in market share.

Edward Garner, director at Kantar Worldpanel, said: “Aldi’s 32% growth rate has lifted its market share to 4.8%; this is a new record for the retailer and means it has nearly caught up with Waitrose on 4.9%. Similarly, Lidl sales have grown by nearly 20% and it has held onto its record share of 3.6%.

“Waitrose has continued to resist pressure from the competition, testament to its policy of maximum differentiation [in terms of customer service, product range and in-store experience], and has grown sales by 3.4%. This figure is well above the market average and thereby has lifted its market share.”

Among the “big four” grocers, both Asda and Sainsbury’s have held onto their market shares of 17% and 16.6% respectively. But Tesco and Morrisons have recorded losses with sales for both outlets declining by 3.8% compared with this time last year.

Iceland, another chain that prides itself on low prices, has posted a small drop in sales for the first time since 2005, but has retained its 2% share.

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