Inflation Eases, Retail Shifts
UK Grocery Inflation Eases to 2.1%; Lidl Overtakes Morrisons Amid Shifting Retail Market
Key Points
Lidl overtook Morrisons in market share in the latest Worldpanel by Numerator data, with Tesco remaining the largest retailer but its share slipping to about 27.8% over the 12 weeks to August 9.
Premium own-label sales grew by 11.1% in the period, and value own-label items featured in 96 million shopping trips, highlighting growing appetite for higher-value private-label products.
Summer shopping was bolstered by a surge in frozen fruit (+48% year-on-year) and strong performance in dips (+23.3%), coleslaw (+23.1%), and potato salad (+22%), driven by hot weather.
Morrisons cut almost 5,000 jobs last year as part of its cost-cutting program to shore up finances amid market pressures.
UK grocery price inflation slowed to 2.1% in the four weeks to August 9, the lowest rate since October 2024, according to Worldpanel by Numerator. That marks a sharp easing from recent highs and gives shoppers their biggest break on food prices in nearly two years.
Despite the relief, spending patterns remain cautious. Shoppers spent an average of £410 on groceries over the period — £14.24 less than the previous four weeks, according to Asian Trader. Promotions accounted for around 31.3% of all sales, showing that bargain-hunting is still very much in fashion.
Heatwave Sends Ice Cream and Sun Cream Sales Soaring
A summer heatwave reshaped what Britons put in their baskets. Sun cream sales jumped about 58% year on year, according to Head Topics. Ice cream and sorbet rose around 26%. Frozen fruit surged 48%. Shoppers also loaded up on "picky bits" — dips grew 23.3%, coleslaw 23.1%, and potato salad 22%, all driven by hot-weather gatherings.
Streamline Feed noted the shift toward chilled finger foods and convenience items as households sought quick, heat-friendly meals. The heatwave did not just change what people bought — it also brought more people into stores, pushing overall take-home sales up about 2.5%.
Ocado Leads Growth While Tesco Loses Ground
Ocado Retail was the fastest-growing grocer in the period, according to Agriland. Tesco remained the largest retailer but saw its market share slip to about 27.8% over the 12 weeks to August 9. In a notable shift, Lidl overtook Morrisons in market share — a sign of how discounters continue to eat into traditional supermarket territory.
Morrisons did see its sales and share tick upward, but the grocer has had a rough stretch. It cut nearly 5,000 jobs last year as part of a major cost-cutting drive to stabilise its finances. Sainsbury's held comparatively steady. Total UK grocery sales rose about 2.7% year on year for the 12 weeks to August 9, per ADVFN.
Premium and Own-Label Products Both Win Shoppers Over
Shoppers are not just chasing the cheapest option. Premium own-label sales grew by 11.1% in the period, according to Agriland. At the same time, value own-label items featured in 96 million shopping trips. That tells a split story — some households are trading up, while others are still watching every penny.
The trend reflects a broader divide in consumer confidence. About 20% of households still report financial struggles. But 39% say they feel financially comfortable — the highest level since late 2021, per Asian Trader. The grocery market is serving two very different kinds of shopper right now.
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