Grocery inflation nudges down as Lidl gets within touching distance of Morrisons

Inflation nudged to 0.2 percentage points in August, down to 5%, while take-home sales from the supermarkets jumped to 4%, according to the latest data by Worldpanel by Numerator (formerly Kantar).

While head of retail and consumer insight at Worldpanel, Fraser McKevitt, noted the “marginal drop” in inflation in the period, he said prices were already “well past the point at which price rises really start to bite”.

“What people pay for their supermarket shopping often impacts their spending across other parts of the high street, too, including their eating and drinking habits out of the home,” McKevitt added.

“Casual and fast service restaurants especially have seen a decline in visitors over the summer, with trips falling by 6% during the three months to mid-July 2025 – compared with last year. The outliers in this are coffee shops, which have bucked the trend.”

While customers are looking to make savings outside of home, they are turning to branded “treats” in their grocery spending.

Sales of branded grocery items jumped 6.1% in the period, ahead of a 4.1% jump in own-label alternatives. This was the largest gap in favour of brands since March 2024.

Branded sales made up 46.4% of all grocery spending but were particularly dominant in lines such as personal care, confectionery, hot drinks and soft drinks, where they accounted for more than 75% of spending.

Premium own-label sales rose by 11.5% for the period.

Lidl threatens Morrisons

Discounter Lidl and pureplay grocer Ocado were the joint fastest growing grocers over the 12 weeks to August 10, 2025, with sales at both retailers jumping 10.7% year on year.

Lidl market share increased 0.5 percentage points to 8.3%. By comparison, Morrisons’ sales inched up 0.9% and its market share now stands at 8.4%.

Tesco enjoyed its largest monthly share gain since December 2024, up 0.8% to 28.4%, driven by a 7.4% jump in sales.

Sainsbury’s sales were up 5.2% year on year, taking its market share to 15%. Aldi sales were up 4.8%, while Asda sales continued to slip, down 2.6% for the period.

The Co-op was the only other retailer to have falling sales during the period, down 3.2%. Spending at Waitrose grew 4.8%, while Iceland had a 3.4% rise.