Grocery inflation eases as Lidl overtakes Morrisons

Grocery inflation reaches its lowest rate of increase since 2024

In the four weeks ending 17 May 2026, like-for-like (LFL) grocery inflation was rising by 3.1%, the slowest rate since December 2024, easing pressure on shoppers. Grocery sales growth remained low at 1.5% year-on-year (YoY), less than half the rate of inflation.  

Inflation is at a low, but it is expected that there will be increased pressure from the Iran conflict as the impact has begun moving through supply chains, with rising costs in red diesel and fertiliser. The impacts of this are yet to hit shelves but are definitely in the post. Shopper confidence has seen a slight increase this month, reflecting the ease of inflation, but shoppers are remaining cautious in anticipation of the price rises, reflected in the marginal sales growth.

Deals driving growth against inflation

Retailers lack flexibility in this situation, as low margins restrict their ability to absorb the costs inbound from the conflict. Increasing prices damages value perception very easily, while dropping prices will set an expected baseline for shoppers. As a result of this, shoppers are using deals and promotions to entice spend. 30.3% of sales this month included a deal, with spend on promoted items up 9.5% YoY, while full price sales were almost flat +0.1% YoY.

Promotions help sustain spend without making permanent price changes and appealing to the value-oriented nature of shoppers. Shoppers are also looking for a deal when shopping for essentials to offset the cost of fuel.

Weather delays summer demand

A cold start to May has delayed summer spending despite retailers having already activated the occasion. Sales of suncare and ice-cream fell 28% and 3% respectively. While warming products such as soup, fresh pies, and coffee rose by 9%, 4%, and 5% respectively. With weather improving later in May, demand for summer items is likely to pick-up as expected.

Lidl overtake Morrisons in market share

After two months of matching Morrisons’ market share, Lidl has surpassed it, reaching a record 8.6% in the 12 weeks to 17 May 2026, an increase of 0.5% YoY. this secured its spot as the fifth largest UK grocer. Sales grew 8.8% YoY for the second month in a row, reflecting continued momentum driven by its value proposition, loyalty scheme, and rapid expansion, all of which have led to the market share increase seen.

Ocado remained the fastest growing retailer, with sales up 10.2% YoY and market share rising to 2.1% (+0.1% YoY). M&S followed closely, overtaking Lidl to become the second fastest growing retailer, with a growth of 9.3% YoY.

Tesco’s sales rose 3.2% YoY, increasing its market share to 28.2% (+0.3% YoY), while Sainsbury’s grew 3.1% YoY, with market share edging up to 15.2% (+0.1% YoY).

Aldi’s sales grew just 0.6% YoY, and its market share fell 0.2% to 10.8% YoY. Growth behind the market is contributing to its decrease share, and Lidl are closing the gap, going from 3.1% to 2.2% difference in two years.

Asda continued to decline in growth, this time with -3% YoY, with YoY market share falling from 12.1% to 11.5%. The retailer recently launched 400 new lines to improve its offer and attract more shoppers.

Morrisons recorded modest growth of 1.3%, still behind market growth, but lost further share (-0.1% YoY). The retailer appears to be struggling to keep up pace with the market, recently announcing it will be closing 100 convenience stores.

Co-op’s sales decline, -0.1% YoY and share slipped to 5.1% (-0.1%), while Waitrose saw a sales growth of 3%, maintaining its 4.5% share.

Iceland saw a YoY sales increase of 1.7%, with its market share decreasing to 2.2%, a 0.1% decrease YoY.

Key takeaways

Overall, the latest Worldpanel by Numerator data suggests that the market is still growing, but only slightly. Grocery inflation has eased to a low 3.1% while volumes have been at less than half of this (1.5%). This suggests that inflation is a main contributor to market growth rather than volume increases. Retailers appear to be leaning on promotions at a time where value perception is becoming incredibly important, since shoppers are attempting to offset the increased spend on fuel into their grocery shops. The impact of the Middle East conflict is yet to have a major impact on the grocery market in the UK, but has begun to infect supply lines, meaning cost increases are certainly in the pipeline for UK retailers.