Money-savvy shoppers are snapping up more promotions and switching to budget supermarkets as grocery inflation hits 3.5%
Consumer spending on promotional deals at supermarkets in Britain is soaring as shoppers saw overall grocery price inflation increase to 3.5 per cent.
Promotional spending made up 28 per cent of all grocery sales last month which was its highest level in March for four years, according to Kantar analysts.
Price cuts by retailers were responsible for £2.6billion of this promotional spending, which was nearly 9 per cent more than at the same time last year.
This was also significantly higher than the £686million spent on multibuy deals and 'extra free' offers as supermarket increase their battle to compete for customers.
The latest data comes after 2024 saw the sharpest year-on-year jump in the proportion of grocery sales on promotion since 2010, up 2.8 percentage points.
Average spending on deals in 2012 was as high as 40 per cent, but the industry has changed notably since with discount chains now holding a far higher market share.
Aldi, which is now approaching the 35th anniversary of its first UK store opening this Saturday, saw its share of the UK market hit 11 per cent for the first time while its sales grew by 5.6 per cent - the chain's fastest rate since last January.
Its rival Lidl's sales rose by 9.1 per cent after attracting 385,000 more shoppers last month - more than any other grocer - to take its market share to 7.8 per cent.
Overall, annual grocery price inflation was 3.5 per cent in the four weeks to March 23 - up from 3.3 per cent in both February and January, after 3.7 per cent in December.
Shoppers browse the products at a Tesco Extra supermarket in London (file picture)
Meanwhile UK grocery sales rose by 1.8 per cent over the same period year-on-year, the slowest rate of growth since June last year.
This growth implies a drop in sales volumes, once inflation is taken into account.
Kantar said prices were rising fastest in chocolate confectionery, butter and spreads, and chilled smoothies and juices, and were falling fastest in dog and cat food and household paper products.
Kantar added that grocery price inflation has edged up as the rising cost of food ranks just behind energy bills on the list of consumers' concerns.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: 'While the number of people reported as financially struggling has fallen from its recent peak, this still accounts for almost a quarter (22 per cent) of the country.
'The rising cost of groceries ranks third on the list of concerns keeping consumers awake at night, just behind energy bills and the country's overall economic outlook.'
Despite worries around personal finances, consumers still spent £134million on chocolate eggs and other seasonal confectionery last month.
And more than a third of households bought hot cross buns, despite Easter not falling until later in April this year.
Kantar's data shows there were 200,000 fewer visitors to supermarket cafes over the last year, with these outlets now accounting for just 0.3 per cent of spending in the grocers.
Just last week, Morrisons announced it is shutting 52 cafés at UK stores.
Ocado was again the fastest growing grocer, a position it has held for the last 11 months, as its sales increased by 11.2 per cent.
Spending on groceries at M&S increased by 13.1 per cent, on top of its products sold through Ocado.
Tesco boosted spending through its tills by 5.4 per cent, nearly half a billion pounds more than the same period a year ago, to achieve the biggest gain in market share from 27.3 per cent to 27.9 per cent.
Sainsbury's reached 35 consecutive periods of year-on-year growth, with sales up by 4.1 per cent as it grew ahead of the market to take a 15.2 per cent share.
| Supermarket | 12 weeks to 24/3/24 (£m) | Share | // | 12 weeks to 23/3/25 (£m) | Share | // | Annual change |
|---|---|---|---|---|---|---|---|
| Total Grocers | 33,669 | 100.0% | // | 34,745 | 100.0% | // | 3.2% |
| Total Multiples | 33,175 | 98.5% | // | 34,252 | 98.6% | // | 3.2% |
| Tesco | 9,184 | 27.3% | // | 9,683 | 27.9% | // | 5.4% |
| Sainsbury's | 5,078 | 15.1% | // | 5,285 | 15.2% | /// | 4.1% |
| Asda | 4,585 | 13.6% | // | 4,330 | 12.5% | // | -5.6% |
| Aldi | 3,606 | 10.7% | // | 3,808 | 11.0% | // | 5.6% |
| Morrisons | 2,921 | 8.7% | // | 2,939 | 8.5% | // | 0.6% |
| Lidl | 2,481 | 7.4% | // | 2,707 | 7.8% | // | 9.1% |
| Co-op | 1,831 | 5.4% | // | 1,849 | 5.3% | // | 1.0% |
| Waitrose | 1,489 | 4.4% | // | 1,529 | 4.4% | // | 2.7% |
| Iceland | 758 | 2.3% | // | 772 | 2.20% | // | 1.8% |
| Ocado | 628 | 1.9% | // | 698 | 2.0% | // | 11.2% |
| Other Multiples | 615 | 1.8% | // | 651 | 1.9% | // | 5.9% |
| Symbols & Independents | 494 | 1.5% | // | 493 | 1.4% | // | -0.2% |
But Asda saw sales fall 5.6 per cent amid a 1.1 percentage points loss of market share over the year.
Industry researcher the Institute of Grocery Distribution has already forecast that food inflation could hit nearly 5 per cent this year.
A separate survey from the British Retail Consortium, also published today, showed overall UK shop prices fell by 0.4 per cent in the 12 months to March, while food prices rose 2.4 per cent.
Retailers have warned that employer tax rises imposed in the Budget, together with another rise in the national minimum wage and a new packaging levy, will also be inflationary.
