Grocery inflation drives sales rather than purchasing activity, report suggests

Dunnes held the largest share of the grocery market in the Republic with 23.2%, edging out Tesco’s market share. Picture: Alan Hamilton

Grocery prices at Irish supermarkets ticked up marginally in July despite overall cooling consumer price inflation, new data showed.

The pace of grocery inflation in the 12 weeks ending the first week of July was 2.6%, creeping up slightly by 0.14 percentage points compared to annual figures in June, according to data from Kantar.

In the Kantar report, business development manager at the Worldpanel Division Ireland Emer Healy said “although there has been a slight increase in inflation, it’s still the lowest level we’ve seen since March 2022".

Data from the market research firm also show that higher prices in supermarkets drove value sales growth rather than increased purchasing among consumers, contributing to bumper financial performances among all of the main supermarkets operating in the Republic.

This slight increase marks the first time that inflation has risen after a consistent 15-month decline, meanwhile overall consumer price inflation cooled ahead of this slight increase.

Separate figures from the Central Statistics Office (CSO) showed consumer price inflation rose by 2.2% June, down from 2.6% in the 12 months to May.

Shoppers are becoming less frugal as affordability improves with easing inflation, Kantar suggested, as there was an increase in shopping frequency in July, up 3.2%.

Other financial burdens may continue to weigh on consumers though as rents soar in Ireland and some mortgage holders have experienced increases in their monthly repayments due to high interest rates.

Own-brand products

Shoppers continued to seek out savings and deals as Kantar found strong annual sales for supermarket own-brand products, with shoppers spending an additional €68m year-on-year.

Premium own-label ranges also performed strongly, said Kantar, as shoppers spent an additional €15.5m on these lines, growth of 10.8% compared to this time last year.

Meanwhile, brands grew ahead of the total market in the latest 12 weeks, up 6%, with shoppers spending an additional €86.3m on branded products versus last year.

Dunnes held the largest share of the grocery market in the Republic with 23.2%, edging out Tesco’s market share of 23.1%, while SuperValu held around 20% of the market.

Budget supermarkets Lidl and Aldi had a market share of 14% and 12% respectively.

European Central Bank (ECB) president Christine Lagarde recently suggested that an expected increase in consumption in the eurozone will aid economic recovery and subsequently lead to lower interest rates.