(Bloomberg) -- Grocery price inflation fell to its lowest level since September 2021 in a further sign of easing cost pressures, ahead of a crucial decision by the Bank of England next month on whether to cut interest rates.
The annual pace of UK supermarket price increases dropped to 1.6% in the four weeks to July 7 from a year earlier, according to data published by research firm Kantar on Tuesday, down from 2.1% in the same survey last month.
The UK’s official rate of inflation will be updated on Wednesday, with economists expecting the consumer prices index to remain around the BOE’s 2% target. The BOE will decide on Aug. 1 whether to cut interest rates for the first time since the start of the pandemic.
Shoppers have pared back their spending since grocery price inflation hit 17% in March 2023, opting instead for value through deals and discounts. There are signs this is changing, however, with consumers making 2% more trips to the supermarket from a year ago — the largest monthly rise in 2024. Sales of branded products also increased at a faster pace than that of private-label items.
Ocado Group Plc was the fastest-growing grocer for the fifth consecutive month, with sales rising nearly 11% over the 12 weeks to July 7. The online business has been winning over customers with price cuts and special offers, now giving it a 1.8% share of the market.
Tesco Plc, meanwhile, expanded its market share the most in more than two years, with sales rising 4.6% in the 12 weeks to July 7 from a year ago. Tesco now holds 27.7% of the market, above J Sainsbury Plc at 15.3%.
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