Return to real growth but inflation is still main driver

Press release

The ‘UK Retail Grocery Channel Forecasts’ report, which includes predictions for in-store, online and convenience grocery shopping until 2029, unpeels the layers of factors currently affecting UK grocery and offers a low, medium and high growth view of the future.

While real terms market growth has advanced by 2.4%, the main driver of growth is still inflation. Real terms growth is expected to continue at a lower level during 2025-26. The report shows that real market growth is not expected to rise above 1.0% for the rest of the forecast.

Meanwhile, shoppers are still using money-saving tactics developed during the cost-of-living crisis. Real wage growth is expected to return to its 2008 rate in 2026, although the report anticipates a higher tax burden on households later in the forecast.

The good news is that convenience and online channels are set to boom over the next five years, while stores focus on expanding their fresh-food offer with ranges catering to local shoppers’ needs. Alex Rowberry Senior Analyst at IGD said:

‘IGD believes businesses should prepare for a mid-growth scenario: UK economic growth remains low, and inflation remains the driver of grocery market performance, as real market growth remains contracted.’

Advances in technology are also expected to propel the growth of online retail as the customer experience improves and more product availability is offered via this channel. Although, supermarkets are predicted to see the highest growth in value.

Rhian Thomas, Head of UK Insight at IGD said: ‘Our channel forecasts are uniquely comprehensive, and IGD’s insight at large is expanding to include in-depth analysis of non-food items in stores and the growing demand for in-store services.’

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ENDS

Notes to editors:

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