UK grocery inflation in surprise rise as experts warn of worse to come | Supermarkets
Shoppers were treated to a surprise rise in grocery inflation last month after four consecutive months of declines, as experts warned of worse to come if there was a prolonged war in the Middle East.
In a blow to households struggling with the cost of living, grocery price inflation rose to 4.3% in the four weeks to Feb. 22, after falling to 4% in January from 4.7% in December, according to market research firm Worldpanel by Numerator.
European Central Bank chief economist Philip Lane also warned that a protracted war in the Middle East could lead to reduced oil and gas supplies from the region, leading to a “significant increase” in inflation and a “sharp decline in output” in the eurozone.
The possibility of a rate cut in the UK towards the end of this month decreased on Tuesday morning; as the UK government’s borrowing costs have risen amid fears about a potential rise in inflation in the city.
While the interest rate or yield of two-year bonds increased by 13.5 basis points (bps), the yield of 10-year bonds increased by 11 basis points and the yield of 30-year bonds increased by 9 basis points. Financial markets showed a 29% chance of a rate cut this month, down from 80% last week.
The crisis has already caused a sharp rise in oil and gas prices, threatening to drive up pump prices for UK motorists and increase household gas and electricity bills.
One Interview with Financial TimesThe ECB’s Lane said that “a jump in energy prices puts upward pressure on inflation, especially in the near term” and that such a development would be “negative” for growth. This will also apply to the UK.
Worldpanel’s head of retail and consumer insights, Fraser McKevitt, said: “Looking ahead to Easter, shoppers will notice that chocolate prices remain high, up 9.3% year on year.
“While this is still a significant increase, the pace of inflation in this category is starting to slow and is now at its lowest level since September 2025.”
But Greggs said “easing inflationary pressures” should lead to stronger consumer spending, as it revealed pre-tax profits fell nearly 18% to £167.4 million in the year to December 27.
The Worldpanel report showed shoppers were excited about the latest celebrations. Pre-made pancake mixes are up 114% in the seven days before Shrove Tuesday compared to the previous week; Those making their own dough paid 42p, or almost 6%, more than last year, as the cost of basic ingredients reached £7.77.
However, ingredient sales increased with flour up 34%, sugar up 17%, and lemons up 70%.
According to Worldpanel, most shoppers left their Valentine’s Day spending until the last minute; almost 12% of households received a premium meal offer on Friday night alone.
Steak buyers moved in later in the week, with sales peaking on Friday and Valentine’s Day. Chocolate lovers also left work late on Friday, the biggest day for buying Valentine’s Day chocolate.
People enjoyed their first-class dinner experience. In total, they spent £39 million on high-end dining deals priced at £10 or more in the week before Valentine’s Day; this was seven times higher than the previous week.
More people are doing their grocery shopping online, with online sales increasing by 9.7% annually. More than 18 million orders were placed in four weeks; This means online shopping accounts for 13% of total grocery sales; this is the highest level since July 2021.
McKevitt said: “Wealthier families in London and the south-east of England are still likely to shop for groceries online. However, the appeal of the channel is broadening and shoppers from a wider economic circle are increasingly attracted to its convenience.”
Online retailer Ocado was once again the fastest-growing grocer in the 12 weeks to February 22, retaining that position since September with sales growth of 15.1% and market share of 2.1%. Discounter Lidl recorded double-digit sales growth for the 12th consecutive month, reaching 10% and 7.8% market share.
The largest supermarket chain, Tesco, increased its sales by 4.5% and increased its market share to 28.5%, while Sainsbury’s increased its sales by 5.2% and increased its market share to 16.1%.
Waitrose, part of the John Lewis Partnership, achieved the highest sales growth since March 2021 at 5.6%, reaching a market share of 4.8%, a three-year high.
Asda’s sales once again fell by 2.6% year-on-year, while the Co-op’s sales fell by 1.6%.
