The ongoing battle between discount and mainstream supermarkets continued over the festive period as groceries fell to their lowest price level in more than a year.
The cost of a typical basket of shopping slumped by 1 per cent in December compared to the previous month – and was 5 per cent lower than the same time last year, saving shoppers an average of £4.33 a week or a notional £225 a year.
Separate figures from the British Retail Consortium revealed overall shop prices fell 2 per cent in December from the 2.1 per cent decline seen in November.
The Groceries Tracker report, carried out by Mysupermarket.co.uk, found that the products which saw the biggest price drops were pasta, which fell by 5 per cent, onions, which were down 7 per cent, and mushrooms, which dropped 18 per cent.
However, not all products fell in price, with a 4 per cent monthly increase in the cost of yoghurts, while sausages and toilet paper both rose by 3 per cent.
Experts said the price drops came as a result of the continued fight for market share between discounters such as Aldi and Lidl and traditional supermarkets such as Tesco and Sainsbury’s.
Aldi and Lidl now control 10 per cent of UK grocery sales – double their share three years ago. Aldi revealed earlier this week that it plans to open 80 branches this year – 23 per cent more than last year and its fastest rate of growth in the UK.
Leigh Sparks, professor of retail studies at Stirling University, said: “There has been price deflation for quite a while now and that looks like it will continue. There has been a lot of downward pressure from both increased competition and the reduction in oil price. It’s clear from noises put out by the discounters just before the Christmas period that in Scotland particularly they are going to open more stores, so we will see a continuation of that increased competition.”
Prof Sparks added that the fall in the price of oil and the subsequent drop in the price of petrol meant that supermarkets were making savings in terms of transport costs. However, he warned that further dramatic falls in grocery prices could impact on the quality of goods.
He said: “There’s a question about whether consumers are going to react to that in terms of looking for elements of quality because you cannot go too cheap and cut everything. It’s a balance between price and quality.”
Kim Ludlow, managing director of Mysupermarket.co.uk, said: “It is great to see the cost of grocery staples come down further in price and shoppers across the UK will be delighted that they can make real savings this January.”