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UK supermarket sales rose by 5.7% in January, according to the latest market share figures from Kantar, though this was significantly lower than the record 16.7% price inflation recorded in the month.

The 16.7% price inflation recorded in the four weeks to 22 January is the highest level since Kantar started tracking the figure in 2008.

Kantar estimated this inflation will put an extra £788 on households’ annual shopping bills if they don’t change behaviour to cut costs.

Overall take-home grocery sales rose by 5.7% during the four-week period represented a slowdown on the 7.6% over the 12 weeks as sales eased back from a bumper Christmas.

Aldi was the fastest-growing grocer for the fourth month in a row this period, with sales 26.9% higher year on year, while Lidl’s sales jumped by 24.1%.

There was little to split Britain’s three largest retailers. Sainsbury’s sales increased by 6.1%, just 0.1 percentage point higher than Asda and Tesco.

Morrisons’ performance has continued to improve for the eleventh month in a row, though sales remain down 1.9% on an annual basis.

Ocado matched the market’s growth rate at 7.6%, well above overall online sales, which were down 0.7%.

Fraser McKevitt, head of retail and consumer insight at Kantar, commented: “Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived.

“Competition in the British grocery sector is as intense as it’s ever been as retailers strive to retain shoppers. The grocers have been doing this by boosting their own-label ranges especially, with sales of these lines growing consistently over the past nine months. January was no exception as own-label lines grew by 9.3%, well ahead of branded alternatives, which were up by just 1.0%.

“Across the market the move is towards everyday low pricing, with many supermarkets offering price matching and using their loyalty schemes to help shoppers save. As a result of this push, the proportion of spending on promotions has fallen to its lowest level since at least 2008 this month, exaggerating the usual post-Christmas drop off in deals.”

Over the longer 12-week period, grocery inflation stands at 14.8%, with prices rising fastest in markets such as milk, eggs and dogfood.

Morning update

Retail chain Pets at Home has raised its full-year profit guidance after record consumer revenues in its third quarter.

The chain reported consumer revenue up 9% in the 12 weeks to 5 January, with growth underpinned by a record number of consumers and volume growth.

Consumer revenues are now up by more than 30% against pre-pandemic numbers.

Overall group revenues were up 8.8% to £347.5m, with group like-for-like revenue up 8.3%, accelerating from the second quarter.

Retail revenue increased by 8%, with LFL revenue up 7.6%, with all categories in growth through the quarter amid further progress in our relative price competitiveness.

Vet group revenue increased by 18.1%.

The group reported resilient gross margin in the period, in line with management expectations, and a strong grip on operating costs supported good profit and cash conversion across the business.

This “robust” trading momentum has continued into the fourth quarter, and with eight weeks of the year left to trade, Pets at Home now expects full-year group underlying pre-tax profits towards the upper end of the current consensus range of £126-136m, ahead of previous guidance of £131m.

CEO Lyssa McGowan commented: “We delivered a really pleasing Q3 with acceleration in sales momentum across the platform. Importantly, the quality of our growth remains strong as we continue to grow volumes and attract new consumers through offering compelling value and service, in what remains a challenging inflationary environment.

“It was particularly pleasing to see our accessories category return to growth, supported by the strong performance in our Christmas range, demonstrating that consumers still want to treat their beloved pets in these challenging times.”

British American Tobacco has announced a new regional structure and a number of management changes to “streamline, and accelerate, the transformation of its business”.

It said the new structure would increase the efficiency of BAT’s geographical footprint, optimise market prioritisation and will be based on fewer, larger business units, enabling even greater collaboration and accelerated decision-making across BAT.

Following this strategic review, the number of regions will be reduced from four to three, and the number of business units from 16 to 12, while also accelerating the company’s market exit plans.

BAT’s new structure will consist of three regions: USA (Reynolds American Inc.), Americas & Europe (AME) and Asia Pacific, Middle East & Africa (APMEA).

CEO Jack Bowles commented: “As our transformation journey towards our strategic milestones gathers pace, we need to further sharpen our operating model, streamline our business to drive agility, and continue to enhance organisational capabilities. As part of our commitment to building A Better Tomorrow, the changes we have announced today will drive increased focus, accelerate our transformation and fuel growth as we strengthen the foundations of our future as a category-led enterprise.”

In addition, two new management board roles will be created in order to ensure clarity of ownership, accountability and focus: chief transformation officer and director, combustibles.

Johan Vandermeulen, currently regional director, Europe, will be appointed to the new role of chief transformation officer.

Luciano Comin, regional director, Americas & Sub-Saharan Africa, will be appointed to the new role of director, combustibles.

On the markets this morning, the FTSE 100 has dropped 0.5% back to 7,742.8pts after the IMF downgraded UK growth prospects for 2023.

Pets at Home has jumped 11.8% on this morning’s news to 370.6p, while THG is up 6.8% to 58.1p and AG Barr 3.6% to 545.7p.

Fallers include McBride, down 2.7% to 23.5p, Ocado, down 2% to 668.8p and DS Smith, down 1% to 350.4p.

Yesterday in the City

The FTSE 100 opened the week up 0.3% to 7,784.9pts.

Risers yesterday included Fever-Tree, up 5.4% to 1,096 after last week’s losses, Greencore, up 5.1% to 78.6p, Reckitt Benckiser, up 2.5% to 5,726p, Naked Wines, up 2.5% to 126.1p, and Kerry Group, up 2.4% to €86.03.

Sainsbury’s was up a further 4.1% to 262.8p following Friday’s gains after Bestway bought a 3.5% chunk of shares for almost £200m in the supermarket.

The day’s fallers included Virgin Wines, down 3.6% to 54p, THG, down 1.6% to 54.4, Ocado, down 1% to 682.4p, Bakkavor, down 0.9% to 116p and SSP Group, down 0.9% to 258.1p.