Fierce competition between multiple grocery retailers and discounters drives down pound value for the same basic 35-product basket vs. December 2014.
Tracking prices published online, mySupermarket.co.uk announced that a basket of 35 popular groceries cost £85.91 in December, 5 per cent less than in December 2014.
Behind the revenue decline are price drops for grocery staples and fresh products such as pasta, onions and mushrooms. However, yoghurt, sausages and toilet paper saw price increases of 3 per cent and more the company reported.
End of year sales are disproportionally important for grocery retailers too, and shoppers tend to temporarily leave discounters and return to the Big 4 for their festive sales. November data from Kantar Worldpanel showed that discounters Aldi and Lidl had seen their 12-month market share increase by 16.5 per cent and 19 per cent respectively. Part of the deflation of the basket value is due to the Big 4 defending their traditional December strength by pushing harder with discounts.
Example in case is Sainsbury's, who cut prices on several products for an estimated value of £150million, funded in part by reducing its interim shareholder dividend.
Source: mysupermarket.co.uk and own reporting