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Grocery price inflation has dropped to a two-year low after intense ‘price match’ competition among supermarkets brought down the cost for shoppers. 

Supermarket prices were 5.3 per cent higher than a year ago in February, the lowest rate since March 2022 and a significant drop from January’s 6.8 per cent, according to analysts Kantar.

Grocery sales meanwhile grew by 5.1 per cent in the four weeks to 18 February. 

Promotions increased again over the month after a post-Christmas slowdown, and consumers spent £586 million more on them than in February last year.

However, Britons still found room within their budgets to celebrate Valentine’s Day, with spending on steak and boxed chocolate up by 12 per cent and 16 per cent compared with last year.

Grocery price inflation has dropped to a two-year low after intense 'price match' competition among supermarkets brought down the cost for shoppers

Grocery price inflation has dropped to a two-year low after intense ‘price match’ competition among supermarkets brought down the cost for shoppers

The end of ‘Dry January’ saw total alcohol sales jumping by 18 per cent in volume terms on the previous month, with consumers buying 28 per cent more wine and 16 per cent more beer and lager. Red wine was particularly popular, with eight million more bottles bought this month than in January.

Amid the intensifying competition between retailers, Morrison’s became the latest retailer to launch a price match scheme with Aldi and Lidl, after Asda made the move in January.

The traditional supermarkets have in recent years felt the heat from German discounters Aldi and Lidl which tend to offer products at lower prices.

The rise of the two chains has taken significant numbers of customers away from the largest supermarkets. 

Lidl was the fastest growing supermarket for the sixth month running with sales up by 10.9 per cent over the 12 weeks to February 18.

Fellow discounter Aldi also grew ahead of the market, boosting sales by 5.7 per cent and maintaining its 9.4 per cent share.

Meanwhile, Sainsbury’s and Tesco increased their share of the market with sales up 7.6 per cent and 6.2 per cent respectively.

Tom Steel, strategic insight director at Kantar, said: ‘Things are looking up for shoppers this February.’

Amid the intensifying competition between retailers, Morrison's became the latest retailer to launch a price match scheme

Amid the intensifying competition between retailers, Morrison’s became the latest retailer to launch a price match scheme

The traditional supermarkets have in recent years felt the heat from German discounters Aldi and Lidl which tend to offer products at lower prices

The traditional supermarkets have in recent years felt the heat from German discounters Aldi and Lidl which tend to offer products at lower prices 

He continued: ‘Consumers have been navigating a grocery inflation rate of more than 4 per cent for two years now, so this latest easing of price rises is especially welcome.

‘Though there’s been lots of discussion about the impact the Red Sea shipping crisis might have on the cost of goods, supermarkets have been pulling out all the stops to keep prices down and help people manage their budgets.’

As prices across the whole economy increased throughout the cost of living crisis, food was one of the highest risers, so while companies are reducing prices, this is often only from a higher baseline over the last two years.

Meanwhile, Marks and Spencer was recently voted as the UK’s favourite supermarket – even though shoppers think it is a ‘bit pricey’.

The high-end chain came out top in a Which? survey for a third year in a row with a customer score of 76 per cent.

Shoppers gushed about M&S’s ‘excellent experience’ and described it as a ‘calm’ and ‘pleasant’ place to pick up your groceries.

Its own-label and fresh products, staff availability and helpfulness, store appearance, and overall customer service all bagged five-star ratings.

But despite the company’s £30million investment to lower prices and push its ‘Remarkable’ value range it only got a two-star rating for value for money.

Meanwhile, Marks and Spencer was recently voted as the UK's favourite supermarket - even though shoppers think it is a 'bit pricey'

Meanwhile, Marks and Spencer was recently voted as the UK’s favourite supermarket – even though shoppers think it is a ‘bit pricey’ 

Budget German chain Aldi came in second in the Which? study with a customer score of 73 per cent.

Some 88 per cent of the 436 surveyed would recommend the supermarket for in-store shopping, with it getting a four-star rating for value for money.

But customers were less than impressed by Aldi’s product range and availability as they both got two stars.

Morrisons finished bottom with it failing to achieve higher than three stars in any of the categories. Asda came joint last with a customer rating of 64 per cent. 

Morrisons lost its status as Britain’s fourth-biggest grocer nearly two years ago because shoppers have been switching to the German discounters.

Last month new chief executive Rami Baitieh pledged to tempt back disillusioned consumers, admitting there was ‘work to do’.

The supermarket will lower the cost of staples – from cornflakes to baby wipes – to match Aldi and Lidl.

The grocer will check the prices of hundreds of products against its rivals twice a week and lower them if needed.

While Morrisons has been losing market share, Aldi took 9.3 per cent compared with 9.2 per cent the year before, and Lidl took 7.5 per cent, up from 7.1 per cent. Tesco and Sainsbury’s also emerged as Christmas winners. 

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This post first appeared on Daily mail

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