UK grocery inflation has edged lower in the four weeks to September 1, according to the latest data from market research firm Kantar. The report, released on Tuesday, showed annual grocery price inflation slipping to 1.7%, a modest drop from the 1.8% recorded in the previous four-week period. This slight decrease comes after a surprise rise in inflation last month, the first increase in 18 months.

Despite this improvement, the cost of living remains a significant concern for the majority of UK households. Nearly 60% of families continue to worry about the rising costs of their weekly shop, with grocery expenses now trailing only energy bills as the top financial strain on consumers.

"This is their second biggest financial worry, only behind home energy bills," said Fraser McKevitt, Kantar’s head of retail and consumer insight.

Mixed Picture for Grocery Prices

The data provides the most up-to-date snapshot of consumer behaviour following the July 4 by-elections. While some grocery products saw rapid price increases, others experienced welcome price drops. According to Kantar, vitamin and mineral supplements, chilled fruit juices, and chocolate confectionery saw the fastest price rises. Meanwhile, essentials like toilet tissue, dog food, and bottled cola drinks experienced the steepest declines in cost.

Though the overall inflation rate for groceries remains relatively low, the uneven price movements across different categories suggest that shoppers are still feeling the pinch, particularly when it comes to certain everyday items.

Inflation Continues to Weigh on Consumers

The slight decline in grocery inflation comes against the backdrop of broader economic pressures. Official figures released in August revealed that overall UK inflation ticked up to 2.2% in July. While this is still below the inflation rates in the eurozone and the United States, it underscores the continued challenges faced by British consumers as wages struggle to keep pace with rising costs. The next round of inflation data, due on September 18, will be closely watched for further signs of how the cost of living crisis is evolving.

Supermarkets Compete Amid Slower Growth

Grocery sales rose by 3.0% year-on-year in value terms over the four-week period, though this marked a slight slowdown from the 3.8% growth seen in the previous month. Despite the deceleration, some supermarkets continue to outperform.

Online retailer Ocado retained its position as the fastest-growing grocer, with sales surging 12.9% year-on-year, its best rate of growth since May 2021. Meanwhile, industry leader Tesco saw sales growth of 5.3%, pushing its market share to 27.8%, the highest it has been since January 2022. Sainsbury’s followed closely with a 5.7% rise in sales.

However, not all supermarkets are sharing in the success. Asda, the third-largest grocery chain in the UK, once again lagged behind its competitors. Its sales fell by 5.6%, leading to a loss of 1.2 percentage points in market share year-on-year. Last month, Asda’s chairman, Stuart Rose, admitted in an interview with The Telegraph that he was "embarrassed" by the group's recent performance.

Outlook for Consumers

The slight dip in grocery inflation may offer some short-term relief for shoppers, but with many still grappling with rising food prices and broader inflationary pressures, the road to recovery is likely to be slow. As households continue to adjust to the realities of higher living costs, grocery prices will remain a key focal point for both consumers and policymakers alike.