Grocery inflation cools but discounters push hard

A market report shows UK grocery inflation cooling while discount chains widen their lead over traditional supermarkets.

Grocery inflation eases to 5 percent as Lidl closes gap with Morrisons

UK grocery inflation has eased to 5 percent, a sign that price pressures may be easing for shoppers. Lidl lifted sales by 10.7 percent in the three months to August 11, narrowing the market share gap with Morrisons to within 0.1 percentage points at 8.4 percent. Morrisons remains challenged by a heavy debt load from a 2021 private equity takeover, while Asda's sales fell 2.6 percent as it works to turn around performance. Aldi grew 4.8 percent, reinforcing the rise of discounters as a force in the market.

The data also shows that the surge from discount banners is driving disruption among the traditional big four. Aldi and Lidl are expanding quickly, signaling a shift in the competitive landscape that could reshape pricing and store strategies across the sector. The inflation reading hints that while prices are still high, volume and item count may be under pressure as shoppers seek cheaper options to offset rising bills.

Discount retailers are rewriting the grocery map, pressuring the big four to respond with sharper pricing and faster store expansion. The debt burden on Morrisons underlines how financial leverage can compound competitive risk, even as discount chains invest heavily to capture more shelf space. The trend toward lower volumes and continued price competition could squeeze margins across the sector if inflation proves persistent. Public tolerance for price cuts could hinge on whether savings reach households quickly and reliably.

Highlights

Markets are shifting fast and the next quarter will reveal if price competition sticks beyond headlines.