In a welcome turn of events for UK households, grocery price inflation has dipped to 4 per cent in January, marking the lowest rate since April 2023. This decrease from December’s 4.3 per cent is a beacon of hope for many shoppers, who are feeling the pinch of rising living costs. A new report from market research firm Worldpanel by Numerator highlights that a record 52.2 per cent of grocery sales now comprise supermarket own-label products, suggesting that consumers are increasingly opting for budget-friendly options.
Shoppers Adjust Their Spending Habits
As shoppers enter the new year, the focus on value is sharper than ever. Fraser McKevitt, head of retail and consumer insight at Worldpanel, emphasised that January is traditionally a month for budget resets, and this year has been no exception. “While grocery sales continue to grow and inflation has eased, value remains front of mind,” he noted. The shift towards own-label products, which have reached historic highs, illustrates this trend.
Promotional items have also seen a remarkable surge, with spending up 10.9 per cent year-on-year, the highest growth rate since October 2024. However, full-price product sales have only seen a modest increase of 1.7 per cent in comparison to the same four-week period last year, indicating that many consumers are still looking for deals amidst a cautious economic climate.
Health-Conscious Choices on the Rise
Interestingly, consumer preferences are evolving alongside these financial pressures. The Worldpanel survey revealed that nearly a quarter of shoppers (23 per cent) are actively seeking high-protein foods, while 26 per cent are opting for high-fibre products. These health-conscious decisions are reflected in the sales figures, with cottage cheese sales soaring by 50 per cent year-on-year, reaching 2.8 million households—an increase of about 600,000 from the previous year. Fresh fruit and dried pulses also experienced a 6 per cent rise, alongside fresh fish (up 5 per cent), poultry (up 3 per cent), and chilled yoghurt (up 4 per cent).
Functional drinks, marketed for their health benefits such as energy and mood enhancement, have gained significant traction, with 11 per cent of households purchasing these products. Spending on functional drinks rose by 13 per cent compared to last year, reflecting a willingness to invest in wellness despite tighter budgets.
Retail Landscape Shifts
In terms of retail performance, Lidl emerged as the fastest-growing bricks-and-mortar retailer, boasting a 10.1 per cent increase in sales over the 12 weeks leading to January 25, 2026. Ocado also reported a notable increase of 14.1 per cent, expanding its market share to 2.1 per cent. Other retailers showed mixed results: Sainsbury’s experienced a 5.3 per cent rise in sales, while Tesco reported a 4.4 per cent increase, capturing 28.7 per cent of the market.
Conversely, Asda faced a decline, with sales down 3.7 per cent compared to the previous year, while Co-op’s sales fell by 1.6 per cent. Meanwhile, M&S saw a 6.9 per cent increase in grocery sales, highlighting a competitive and fluctuating market landscape.
Why it Matters
The current easing of grocery price inflation is a significant development for UK consumers navigating a challenging economic landscape. As households continue to prioritise value and health-conscious choices, retailers must adapt to these shifting preferences. This trend not only influences purchasing behaviour but also signals the ongoing impact of economic pressures on everyday life. Understanding these dynamics is essential for businesses and policymakers alike as they work to support consumers during these uncertain times.
