Food price inflation jumped to 3.7% last month, the highest level since March, helping fuel a bumper season for supermarkets.
Sales at the big grocery chains were up 2.1% over the four weeks to 29 December compared with a year before, according to the analysts Kantar. However, that rise was flattered by food price growth, which jumped more than 1 percentage point from 2.6% in November.
Inflation has been gradually increasing since July, but took a big step up last month led by confectionery, skincare and juices, taking household spending on festive take-home groceries to a record high of £460 on average.
Kantar also looked at trading in the three months to the end of December. The market leader, Tesco, increased sales of take-home groceries by 5% over that period, taking its market share to more than 28%.
The UK’s number two, Sainsbury’s, increased sales by 3.5% while the discounter Lidl was up 6.6% and Marks & Spencer 8.7%, with all benefiting from a collapse in sales at Asda – which was down 5.8% – the only faller among the major grocers.
The disappointing performance from the privately-owned chain indicates the scale of the challenge for the new chairman, Allan Leighton, who has been tasked with turning around Asda’s performance. The retailer is struggling to tackle IT issues and heavy price competition under the weight of hefty debts taken on to fund a £6.8bn buy-out in 2020.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said: “It was a solid Christmas at the supermarkets with sales surpassing £13bn during the four weeks of December for the first time ever, showing people were clearly in the mood to celebrate and spend.
“People were also willing to splash out that little bit more than usual, as sales growth for branded goods accelerated to 4.2%, while premium own-label lines jumped by 14.6%.”
Sparkling wine and champagne sales rose 4.4% to a total of £187m in December. There was enjoyment in moderation too, as 11% of the population bought a no or low alcohol drink, up from under 10% last year.
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McKevitt added that more people had chosen to do at least some of their grocery shopping online this Christmas, so that online spending for December reached a record £1.6bn.
However, analysts at NeilsenIQ said that the online share of the market had dipped to 11.9% in December from 12.5% a year before, as shoppers sought out savings at bricks and mortar stores, where visits rose 8% – a marked difference to the trend in non-food shopping.
