(Bloomberg) -- Grocery inflation bounced back in the UK last month, according to research company Kantar.
Prices at supermarkets increased 2% in the four weeks to Sept. 29, its data showed Tuesday, up from 1.7% the previous month.
The fastest increases were in chilled drinks and chocolate confectionery, Kantar said, indicating that record high cocoa prices from poor harvests in West Africa are starting to feed through.
It comes as the Bank of England weighs up how quickly to reduce interest rates. The central bank cut rates by a quarter of a percentage point in August, the first easing since the pandemic.
Its Monetary Policy Committee held the level last month but has two more decisions to make this year in November and December. Governor Andrew Bailey hinted last week at a “bit more aggressive” loosening of policy to come.
Tesco climbed to its highest market share since December 2017, the Kantar figures also showed. The UK’s largest supermarket now has 28% of the market, up from 27.4% a year ago.
Ocado was the fastest growing grocer for the eighth month in a row, with sales rising 10% in the 12 weeks to Sept. 29.
Asda, which has struggled to compete against German discounters Lidl and Aldi, remains on a 12.6% market share, with sales down more than 5% on a year earlier.
Consumer Morale
There are signs elsewhere that consumer activity is weakening for grocers. Card spend on groceries in September fell for the first time in three months, according to a report from Barclays published earlier Tuesday.
Separate data from the British Retail Consortium showed food sales rising 3.1% in the three months to September, but that was weaker than growth of 7.4% in September 2023.
Sales were “no doubt depressed by the wet weather as well as cautionary economic messages from the government,” said Sarah Bradbury, CEO of grocery analysis outfit IGD.
(Adds data from BRC and Barclays. A previous version corrected the time period for Ocado’s sales in the seventh paragraph.)
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