UK grocery inflation slows as supermarkets ramp up promotions
Key Takeaways:
- Tax rises are firmly back on the table — Chancellor Rachel Reeves refused to rule out increases ahead of the 26 November Budget, signalling a potential break from Labour’s election pledges.
- Economic pressures are driving the shift — Slower growth, higher borrowing costs and a widening fiscal gap have forced the Treasury to consider “tough choices” to balance the books.
- Legal and financial planning is now time-sensitive — Solicitors and advisers should prepare clients for possible changes to income tax, VAT or reliefs affecting wills, property, and estate planning.
Grocery inflation slows to 4.7%
British grocery inflation slowed to 4.7% in the four weeks to November 2, the lowest level since early 2024, according to new data from Worldpanel by Numerator (formerly Kantar).
The easing of prices reflects the impact of early Christmas promotions as supermarkets intensify discounts to compete for holiday spending.
The new data provides an early snapshot of price pressures ahead of the official UK inflation report due on 19 November. It compares with a 5.2% rate in the previous four-week period — a notable deceleration that will be welcome news for households squeezed by rising housing and energy costs.
Promotions drive slowdown
Fraser McKevitt, head of retail and consumer insight at Worldpanel, said nearly 30% of all grocery spending in October was on promoted items — a sharp increase from earlier in the year.
“Promotions are back in full force,” McKevitt said. “We expect the proportion of spending on discounted goods to climb even higher as we move closer to Christmas.”
The data shows spending on deals rose by 9.4% year-on-year, while spending on full-priced items rose only 1.8%.
Shoppers are increasingly prioritising discounts on essentials and festive treats alike, from chocolate and coffee to fresh meat. Meanwhile, prices fell fastest in categories such as household paper, sugar confectionery, and pet food.
Sales up, but volumes down
Grocery sales grew by 3.2% year-on-year in the four-week period. However, because that figure is below the inflation rate, it means sales volumes actually declined — people are spending more in cash terms but taking home less.
That pattern reflects a cautious consumer mood. While wage growth has slowed, the cost of essentials such as rent and utilities remains elevated, limiting disposable income.
Separate surveys this week showed overall UK consumer spending cooled in October, as households delayed big purchases until Black Friday and the 26 November Budget.
Winners and losers in UK grocery retail
According to Worldpanel’s 12-week data to November 2:
Retailer | Market share (2025) | Market share (2024) | Sales change (YoY) |
Tesco | 28.2% | 27.7% | +5.9% |
Sainsbury’s | 15.7% | 15.5% | +5.2% |
Asda | 11.6% | 12.6% | -3.9% |
Aldi | 10.6% | 10.5% | +4.4% |
Morrisons | 8.3% | 8.5% | +2.3% |
Lidl | 8.2% | 7.7% | +10.8% |
Co-op | 5.4% | 5.7% | -1.4% |
Waitrose | 4.4% | 4.5% | +3.8% |
Iceland | 2.3% | 2.2% | +4.9% |
Ocado | 2.1% | 1.9% | +15.9% |
Tesco and Sainsbury’s both gained market share and grew sales by over 5%, strengthening their dominance at the top of Britain’s £230 billion grocery market.
Asda, however, continued to lose ground — with sales down nearly 4% and its share dropping by a full percentage point to 11.6%.
Ocado remained the UK’s fastest-growing supermarket, expanding sales by nearly 16% over the 12-week period, as online grocery delivery cements its post-pandemic role.
Lidl also posted impressive growth at 10.8%, making it the strongest performer among the traditional “bricks-and-mortar” grocers.
Why the slowdown matters
Although grocery inflation is slowing, consumers are not necessarily feeling much relief at the till. Prices are still rising, just at a slower pace — and household budgets remain under strain.
Economists note that food prices have been among the most persistent elements of the UK’s broader inflation challenge.
Even as energy prices stabilised, items such as meat, coffee and confectionery have continued to climb, driven by global commodity costs and domestic wage pressures.
However, retailers are now under intense competitive pressure. With consumer spending softening and interest rates still high, supermarkets have limited room to pass on additional cost increases.
Supermarkets switch strategy
To maintain loyalty, the UK’s biggest grocers have intensified their price-cutting and loyalty-card promotions.
- Tesco Clubcard Prices and Sainsbury’s Nectar Prices have expanded across thousands of items.
- Aldi and Lidl continue to attract value-conscious shoppers by matching prices on key staples.
- Morrisons has relaunched its “More Card” with deeper festive discounts.
Worldpanel said almost one in three grocery transactions now includes a loyalty-linked discount — the highest proportion in over five years.
“This shows that retailers are fighting harder than ever for market share,” said McKevitt. “Promotions are likely to dominate the Christmas season.”
Consumer outlook and policy backdrop
The timing of the inflation slowdown comes as the Treasury signals possible tax increases in the upcoming Autumn Budget.
The prospect of higher taxes — coupled with lingering cost-of-living pressures — could further dampen consumer confidence into 2026.
While headline inflation remains near 3.8%, economists warn that food and energy costs still account for a disproportionate share of household expenditure, especially among lower-income families.
For the Bank of England, the mixed picture complicates decisions on when to begin cutting interest rates. A softer grocery-inflation reading helps ease pressure, but policymakers remain wary of declaring victory too early.
Legal and financial implications (for Parachute Law readers)
1. Consumer rights and pricing transparency
With aggressive promotional activity, supermarkets must remain compliant with Consumer Protection from Unfair Trading Regulations 2008 — particularly regarding “was/now” pricing.
Promotions must reflect genuine savings, and misleading price comparisons can expose retailers to enforcement by the Competition and Markets Authority (CMA).
2. Contract and supply-chain pressures
Retailers’ push for discounts may squeeze suppliers, especially small food producers. Contract renegotiations should ensure compliance with the Groceries Supply Code of Practice (GSCOP), which protects suppliers from unfair demands or retrospective changes.
3. Fiscal planning ahead of the Budget
With potential tax changes on the horizon, advisers should brief clients on possible implications for VAT, inheritance tax, and property reliefs. Any adjustment could affect food importers, estate owners, or small businesses planning for Q1 2026.
Industry reactions
Tesco said in a statement that its focus remains on “delivering great value and low prices for customers, especially in the run-up to Christmas.”
Sainsbury’s credited its “Nectar Prices” strategy for sustained customer loyalty.
Asda, still adjusting to ownership and cost challenges, said it was “investing heavily in price and convenience.”
Meanwhile, Ocado’s 15.9% growth underscores the resilience of online shopping — bolstered by expanding delivery partnerships and rising demand for premium products.
Expert commentary
Market analysts expect grocery inflation to continue easing into early 2026 if commodity prices remain stable and retailers maintain deep discounts.
However, the risk of renewed price pressures cannot be ruled out if tax or supply-chain costs rise after the Budget.
Helen Dickinson, chief executive of the British Retail Consortium, said:
“Retailers are doing their best to keep prices down for customers, but costs — from business rates to energy — are still a challenge. The government must ensure its policies don’t undo the progress we’ve made.”
What’s next for shoppers
- Expect more promotions: Black Friday-style grocery deals are likely to peak in late November and early December.
- Christmas competition: Retailers are expected to roll out aggressive holiday campaigns to capture limited household spending.
- Price stabilisation in 2026: Analysts forecast grocery inflation could fall below 4% by early next year if no new supply shocks emerge.
- Budget implications: Any tax rise could limit retailers’ ability to sustain discounts into the new year.
Conclusion
The easing of UK grocery inflation to 4.7% offers cautious optimism that the worst of the food-price surge may be over. Yet for many households, the weekly shop remains a balancing act — even as supermarket aisles fill with “half-price” signs.
With tax decisions looming, supermarket promotions are both a seasonal strategy and a reflection of deeper economic pressure. The coming weeks — including the 26 November Budget — will determine whether price stability can hold, or whether the relief is short-lived.
Related Reading:
2025 Standard Crime Contract: Welcome Packs, Key Changes, and Resources for Providers
