UK supermarket inflation holds at 4.9% as prices rise fastest for chocolate, fresh meat and butter

Supermarket grocery prices in Britain were 4.9% higher than a year ago in the four weeks to Sept. 7, with the fastest rises recorded for chocolate, fresh meat and butter or spreads, market research firm Worldpanel by Numerator said on Tuesday.

The 4.9% rate is marginally below August's 5.0% and July's 5.2% — the highest since January 2024 — but remains well above the UK's headline Consumer Prices Index rate of 3.8%, according to the Office for National Statistics. Worldpanel also reported that take-home grocery sales increased 4.8% in the same four-week period compared with a year earlier.

Fraser McKevitt, Worldpanel's head of retail and consumer insight, said prices were still rising even as the pace eased slightly and that the "battle between own label lines and brands continues as household finances remain tight." Worldpanel's data showed supermarket own-label products accounted for 51.2% of sales, up from 50.9% a year earlier, with own-label sales rising 5.9% versus a 5.3% rise for brands. Premium own-label lines were singled out as a standout performer, with sales up 10.3%.

While some categories saw notable price increases, Worldpanel reported recent price falls in household paper, sugar confectionery and dog food. The research firm said shifts in seasonal buying were also evident: the return to work and school drove demand for lunchbox staples, with two-week sales to Sept. 7 showing jumps in yogurt (up 26%), sliced cooked meats (up 17%) and cheddar cheese (up 24%). The firm said sandwiches remain common in children's lunchboxes but that cooked poultry is gaining popularity.

The 12 weeks to Sept. 7 showed total grocery spending across major retailers of about £35.48 billion, up 4.7% from the same period a year earlier, Worldpanel reported. Tesco increased its market share most, accounting for 28.4% of sales and recording spending growth of 7.7%, its strongest since December 2023. Ocado was the fastest-growing retailer, with sales up 11.9% over 12 weeks, outpacing online grocery growth of 8.2%.

Lidl was the fastest-growing bricks-and-mortar chain, with sales up 11.0% and share rising to 8.2% from 7.8% a year earlier. Aldi held a 10.7% share with spending up 4.7%. Sainsbury's spending rose 5.4%, lifting its share to 15.1%. Asda's 12-week spending fell 2.7% year on year, leaving it with an 11.8% share, while Morrisons held an 8.4% share. Smaller chains and specialists recorded mixed results: Waitrose's spending rose 4.3% with a 4.4% share, Iceland's take-home sales grew 4.7% with a 2.3% share, and Marks & Spencer's grocery sales were 5.9% higher year on year.

Worldpanel said families were also turning to pre-worn clothing for schoolwear, with second-hand items accounting for 13.1% of schoolwear purchases. The research firm noted that grocers' back-to-school fashion initiatives helped lift sales in a market that had softened over the summer, as average prices fell and shoppers increased basket sizes to take advantage of discounts.

Industry bodies and retailers warned that grocery price pressures could intensify toward the end of the year. The Food and Drink Federation said food and drink inflation could reach 5.7% by year-end, pointing to the impact of recent government measures including a rise in National Insurance and new packaging taxes. The federation said those costs could push up food bills at Christmas.

Aldi's chief executive has also flagged "persistent and urgent" pressures on shoppers and warned of potential ripple effects from higher business costs. The comments came as Labour pushes forward with an employment-rights overhaul that the government says will extend worker protections and give some rights from day one of employment. The Conservative Party has estimated the package could add to employers' costs, citing figures that include a National Insurance increase introduced earlier in the year.

Analysts said the combination of higher input and regulatory costs, ongoing demand for value, and the growing prominence of premium own-label ranges is shaping retailer strategies. Worldpanel's McKevitt noted that although price increases have moderated from mid-summer peaks, the persistence of above-trend grocery inflation keeps cost and assortment management central to supermarket competition as retailers head into the festive season.