UK grocery inflation cools to 3 per cent as Iran war price shock fears ease

UK grocery inflation eased further in June, calming concerns that tensions in the Middle East could quickly push up supermarket prices, according to the latest data from Worldpanel by Numerator.

The research firm said grocery inflation slowed to 3.0 per cent in the four weeks to June 14, compared with 3.1 per cent in the previous report and 3.8 per cent earlier, signalling a moderation in food price pressures.

The latest figures offer an early snapshot of UK consumer behaviour ahead of official food inflation data due next month.

Despite easing inflation, grocery sales growth remained modest. Worldpanel data showed supermarket sales increased 2.4 per cent year-on-year during the four-week period, suggesting shoppers bought fewer items after accounting for inflation.

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A spell of warm weather boosted demand for summer products such as sun care items and beef burgers. However, consumers continued searching for savings, with 30.4 per cent of all grocery sales involving promotional deals.

Worldpanel noted that prices were rising fastest in categories such as fresh fish and skincare products, while items including butter, spreads and soft drinks saw sharper price declines.

Concerns had grown that the Iran conflict could drive up costs across supply chains. However, the UK’s largest supermarket chain Tesco recently said inflation linked to the conflict had “not materialised as an issue."

Industry groups remain cautious, with the British Retail Consortium warning that food inflation could rise in the coming months due to higher input costs.

Among major supermarkets, Tesco retained its market leadership, though its sales growth slowed to 1.2 per cent in the 12 weeks to June 14, with its market share slipping slightly to 28.0 per cent.

Sainsbury’s performed better, recording 2 per cent sales growth, while discount chain Lidl GB remained the fastest-growing physical supermarket with an 8.6 per cent jump in sales.

Online grocer Ocado delivered the strongest overall growth, with sales rising 13.5 per cent, while Asda continued to struggle, losing market share as sales declined 3.6 per cent year-on-year.