UK shoppers are choosing to shop at discount supermarkets in greater numbers as grocery price inflation reaches its highest level in a decade amid a mounting cost of living crisis.
Aldi grabbed its biggest share of the grocery market to date and Lidl matched its previous peak as grocery price inflation reached 5.2% in March, the highest level since April 2012, according to the latest figures from the analysts Kantar.
Lidl confirmed its spot as the UK’s sixth-largest supermarket chain ahead of the Co-op with 6.4% market share while Aldi reached 8.6%, less than 1% behind the UK’s fourth-largest chain, Morrisons.
Kantar said prices were rising fastest for pet food and savoury snacks, such as crisps, but were still falling for some products such as fresh bacon.
Food price inflation, fuelled by the rising cost of basic commodities such as wheat and cooking oil as well as energy and packaging, is forcing shoppers to change their habits as price rises filter through to supermarket shelves. With headline consumer price inflation running at 6.2% – the highest level in three decades – families on tight budgets are seeking ways to save on basic necessities.
Shoppers are increasingly turning to supermarkets’ own-label goods rather than well-known brands with more than half of spending on such items – 50.6% – up from just under half a year ago.
Cooking from scratch, which rose in popularity during the Covid lockdowns, also appears to have remained more prevalent with the volume of flour sold up 28% on March 2019 while dry pasta sales are up 17% on pre-pandemic levels.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “More and more we’re going to see consumers and retailers take action to manage the growing cost of grocery baskets.”
Aldi and Lidl were the only big chains to increase sales in the 12 weeks to 20 March, recovering from a downturn during the first stage of the pandemic when there was more demand for home deliveries and less interest in shopping around.
Morrisons and Asda were hit the hardest by changing habits, potentially losing out as their budget-conscious shoppers turned to discounters, while Tesco fared the best of the big chains, but with sales still down 5.2% over the three-month period.
Overall spending in supermarkets dropped by 6.3% in the 12 weeks to 20 March compared with the same period a year before, as the return to the office and reopening of cafes, restaurants and bars damped down demand for home cooking.
Independent retailers were the biggest losers, with sales down 13.4% as shoppers returned to big stores after shopping locally increased during the lockdowns.