British grocery inflation held steady last month, helped by supermarket promotions which shoppers are increasingly relying on to keep their bills low amid worries over the cost of living, according to Kantar.
Supermarkets have warned that tax rises in the new Labour government’s first budget in October, together with another hike in the national minimum wage, will be inflationary this year.
Britain’s headline rate of inflation hit a 10-month high of 3% in January and the Bank of England forecasts it will climb further to 3.7% later this year, while industry researcher – the Institute of Grocery Distribution (IGD) – has forecast that food inflation could hit nearly 5% this year.
Market researcher Kantar said on Tuesday annual grocery price inflation was 3.3% in the four weeks to 23 February, the same as last month’s report, on sales which were up 3.6% year on year.
Kantar said products bought on special offer accounted for 27.6% of sales, a rise of 0.3 percentage points on last year, showing the growing popularity of promotions such as Tesco’s Club Card price and similar deals.
The British Retail Consortium said earlier on Tuesday that food inflation rose to 2.1% last month – its highest rate since September last year – reflecting higher prices for butter, cheese, eggs and cereals.
For the 12 weeks to 23 February, market leader Tesco posted a 5.8% rise in sales, while sales at number-two retailer Sainsburys rose 4.8%.
Asda trailed its two bigger competitors, with sales down 5% in the period.
Online supermarket Ocado continued its strong run, posting a 9.6% rise for the period, while discounters Aldi and Lidl also performed strongly with increases of 4.9% and 8.1% respectively.
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