supermarkets

Supermarket prices have fallen by more than 3% on a year-on-year basis for the first time, as the deflation that has gripped the sector for almost two years shows no sign of easing.

The Grocer Price Index, collated by Brand View from almost 62,000 SKUs across the big four, moved to a record deflationary level of -3.1% in the month to 1 June.

It marks the first time the index has recorded supermarket price falls of over 3% year on year, with the previous record figure of -2.9% recorded in the month to 1 March 2016.

Tesco retained its position as the biggest annual price cutter, with its prices down 3.7% on last year. The UK’s largest supermarket was also the leading price cutter in the month to 1 May, with prices down 3.4%.

Unsurprisingly, each of the big four recorded falling prices, with Asda seeing the second largest price falls (of -3%) in the month. Sainsbury’s prices were 2.9% lower year on year and Morrisons were down 2.2% .

Tesco’s launch of its Farms brands in March seems to have been a key driver behind the lower prices it has been posting. The retailer’s meat, fish & poultry category - in which its new Willow, Woodside and Boswell Farms ranges sit - saw annual deflation of 9.1% compared with an average 5% drop in the category across the big four.

Other categories displaying high levels of annual deflation across the big four include alcohol at -4.5%, frozen at -3.9% and bakery at -3.1%.

The latest Grocer Price Index also shows a 0.9% drop in average prices on a month-on-month basis - the third highest monthly fall recorded over the past year. Sainsbury’s saw the biggest month-on-month falls, suggesting its new focus on lower regular prices is beginning to have an impact. It saw month-on-month prices dip by 1.2%, compared with 0.4% at Tesco and 0.3% at Asda, after it removed its Brand Match promotion and scaled down multi-buy offers to concentrate on simpler price cuts.

Sainsbury’s recorded big monthly price drops in fruit and veg (-4.4%), deli (-3.7%), baby goods (-2.5%) and alcohol (-2.3%). The highest overall monthly falls were seen in fruit & veg (-2.8%) and alcohol (-2.5%).