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Grocery price inflation fell for the 14th consecutive month back to 3.2% last month, aided by a significant increase in promotional spending.

According to new data from Kantar, grocery sales were up 3.3% in the four weeks to 14 April, despite inflation falling again to 3.2% in the period.

The decline in price inflation has been partly driven by a sharp rise in promotions, with items bought on offer making up 29.3% of supermarket sales – the highest level outside Christmas since June 2021.

Fraser McKevitt, head of retail and consumer insight at Worldpanel by Kantar, said: “Deals helped shoppers save a massive £1.3bn in the latest four weeks, almost £46 per household. This emphasis on offers, coupled with falling prices in some categories like toilet tissues, butter and milk, has helped to bring the rate of grocery inflation down for shoppers at the till.”

On an individual grocer basis, Sainsbury’s was the fastest-growing of the mults, with sales up 6.8% compared with Tesco’s gain of 5.9%.

Morrisons continues to recover growth, with sales up 3.8%, while Asda’s sales were down 0.4%.

Of the discounters, Lidl was up 9.1%, while Aldi’s growth slowed to 2.8%.

Waitrose and Iceland were both up by 3.7%, while Co-op was down 0.1%.

Ocado was the fastest-growing grocery player overall, with sales up 12.5% in the period.

Meanwhile, total online reached a share of 12.0% for the first time since July 2022.

An early Easter didn’t dent seasonal sales, as spending on confectionery topped £100m for the first time ever in the seven days up to and including Easter Sunday. 

McKevitt commented: “Higher prices have played a role in reaching that record spend figure, but the number of chocolate eggs sold in the seven days to Easter was also 3% higher this spring than last, with 37% of consumers buying one in that week.

“The growth in confectionery also reflects a broader trend towards snacking in British diets. Over the past decade, there’s been an increase in almost all types of snacks.”

With the Easter celebrations over, both shoppers and retailers will now be looking ahead to the two bank holidays in May. Excluding the coronation, the weeks before the two standard long weekends in May 2023 saw an average increase in sales of £82m, representing a 3% uplift in spend.

Grocery inflation now stands at 4.1% for the 12-week period ending 14 April 2024. Prices are rising fastest in markets such as sugar confectionery, chocolate confectionery and chilled fruit juices & drinks, and are falling fastest in toilet tissues, butter and milk.

Morning update

Associated British Foods has posted a strong rebound in profits in the first half of its financial year as margins expanded across its business.

Overall group revenues for the six months to 2 March were up 5%, driven by to £9.7m continued good momentum in its Primark retail and food businesses.

Grocery sales were up 5% to £2.1bn having performed “better than expected” in the period, driven by last year’s price increases and volume growth in leading brands.

ABF said Twinings grew well, with good volume growth in its major markets of the US, UK and France, Patak’s delivered good sales growth and its Mazzetti balsamic vinegars enjoyed further volume growth.

US-focused brands continued to trade very well, while its UK-focused brands also delivered solid performance.

Allied Bakeries delivered a significant reduction in losses compared with last year, with better sales and volumes as well as improved operational performance. Ryvita started to benefit from successful new product launches and Dorset Cereals’ sales stabilised with new product development and advertising under way.

Overall adjusted operating profit margin recovered across the division and adjusted operating profit was significantly higher, up 39%.

ABF also saw double-digit adjusted operating profit margin gains in its ingredients, agriculture and sugar divisions, with the latter up 74%.

Its Primark business saw sales up 7.5% to £4.5bn and adjusted profit margin up 46%.

Overall adjusted operating profit was £951m, an increase of 39% at actual rates compared with last year, reflecting strong margin recovery, and improvements in operational performance.

Operating profit for the group of £931m was 40% ahead, after charging exceptional items of £6m.

ABF said it remained on track to deliver significant growth in both profitability and cash generation ahead of expectations at the start of this financial year.

It expects grocery to continue to perform well, supported by a step-up in marketing investment, while Primark is expected to continue its strong performance driven by store openings and volume growth.

ABF CEO George Weston said: “This is a very strong set of financial results, as we are now benefitting from the restoration of some normality in our markets and in our supply chains. Improvements to the group’s operational performance, driven by the investments and strong execution over the last few years, are now becoming visible. Group profit margins are recovering accordingly to more normal levels.

“Looking ahead, we continue to invest with discipline to build further sustainable growth. Geopolitical risks remain, of course, and the consumer has yet to fully emerge from cost of living pressures. But the group is well positioned to deliver good returns to shareholders.”

Elsewhere this morning, THG saw an acceleration of growth in its first quarter, with sales up 4.5% in the three months to 31 March compared to 1.1% growth in the fourth quarter of last year.

The online retailer said strong momentum in beauty offset continuing currency headwinds and a previously announced rebrand transition in nutrition.

Beauty sales were up 11.5% to £267.6m, while nutrition was down 5.8% to £150.8m.

THG Ingenuity external revenue continued to build in March at 26.3% year on year an acceleration on December’s growth of 14.7%. The division delivered numerous contract wins, including a partnership with fashion and lifestyle brand White Stuff on their brand relaunch into Germany.

Expectations for the full-year and medium-term remain unchanged, with group revenues in the first half expected to be up between 2%-5%, moving towards high single digits in the second half.

CEO Matthew Moulding commented: “Following the group’s return to revenue growth in Q4 2023, it’s pleasing to report an acceleration in Q1, which is testament to the hard work and dedication of our people, who’ve remained focused on the task in hand despite the tough macro-economic backdrop.

“It’s also clear that the accelerated infrastructure investments made during 2019-2022, specifically into our fulfilment network and tech capabilities, are playing a significant part in delivering competitive advantage. With this major capex program behind us, these investments will continue delivering meaningful savings, which accelerate further as new Ingenuity partners are onboarded.

“The response to the Myprotein elevation rebrand has been fantastic. While these changes naturally impact short term revenues as old and new branded products are swapped out, the strong positive response from online consumers and offline retail partners alike underpins confidence once full product availability is restored.”

On the markets this morning, the FTSE 100 is up again on yesterday’s record levels, rising another 0.4% to 8,058.7pts.

Risers include ABF, up 9.3% to 2,738p, Ocado, up 4.8% to 375.6p and THG, up 3.1% to 63.9p.

Fallers include DS Smith, down 1.1% to 351p, PayPoiny, down 1.1% to 527p and C&C Group, down 1.6% to 162p.

Yesterday in the City

The FTSE 100 set a new record closing price yesterday after jumping 1.6% to 8,023.9pts.

The rise was driven by strong company results, including in the financial and consumer sectors, while also helped by the weaker pound and improving inflationary picture.

Risers included PayPoint, up 9.7% to 533p, McBride, up 7.4% to 108.5p, PZ Cussons, up 4.7% to 94.5p, Marks & Spencer, up 4.4% to 256.6p, Sainsbury’s, up 3.9% to 269p and THG, up 3.9% to 62p.

The few fallers included Nichols, down 2.2% to 978p, DS Smith, down 1.1% to 354.8p and Deliveroo, down 0.6% to 126.3p.