Tesco has recorded its lowest level of inflation for almost a year as the UK’s biggest supermarket looks to step back into line with the other major players.
The Grocer Price Index, collated by Brand View from more than 60,000 individual SKUs, found that Tesco still has the highest level of annual inflation among the big four supermarket players in the month to 1 June.
However, Tesco’s 2.3% rate of annual inflation fell considerably from the 3.4% posted in the month to 1 May after peaking at 4.1% in the month to 1 March.
Though the figures do not take into account the impact of its Brand Guarantee cashback scheme, Tesco has been running hot since the month to 1 August 2017 as it pushed through price increases in the latter half of the year after posting lower inflation than its competitors in early 2018.
This significant fall in Tesco’s inflation helped the overall GPI ease back from 1.2% to 1.1%, despite a rise in inflation across the rest of the big four and continued inflationary pressures from the soft drinks levy.
Price cuts on around 900 lines had seen Sainsbury’s record deflation of 0.4% in the month to 1 May, but rose to post inflation of 0.1% this month. Morrisons moved from +0.1% last month to +0.6% and Asda rose from +0.5% to +1%.
That meant the gap between Tesco and its nearest rival is 1.2 percentage points - its lowest level since the month to 1 November, when the gap was just 0.2 percentage points. This gap had reached as much as 2.9 percentage points last month.
The overall GPI remains at its second lowest level over the past year, with only the 0.8% inflation in the month to 1 April representing a lower figure.
On a category basis, soft drinks inflation remained strong at 2.9%, though it has eased somewhat from the 3.8% jump last month in the immediate wake of the sugar levy.
Biscuits, confectionery and snacks become the category with the most significant inflation, with prices up 3.4%. Other categories in strong inflation included chilled (+2.3%), frozen (+2.2%) and bakery (+2.1%).
Of the 14 GPI categories, only health and beauty and household showed lower prices year on year, with the categories down 1.8% and 0.9% respectively.
At Tesco, the biggest changes in its rates of annual inflation were in health & beauty and alcohol, with the rate in both down 2.8 percentage points into annual deflation.
Ambient grocery, the biggest category in terms of SKUs, also saw a notable reverse at Tesco, with deflation of 1.1% compared with inflation of 1.1%.
Across the big four, overall month-on-month prices eased back 1.2% in the period, with the biggest category changes seen in fruit & veg (-3.9%), alcohol (-2.9%) and health & beauty (-2.4%).
Waitrose, not included in the overall GPI figure, saw annual inflation of 0.3%.