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Aldi and Lidl benefit as inflation pushes up supermarket bills for consumers

British consumers are facing rising prices for household staples as higher inflation continues to push up the cost of a supermarket shopping trip, further boosting discounters Aldi and Lidl.

Research from Kantar shows that grocery inflation is up 2.3% versus the same time last year, with products such as butter, fish, tea and skincare all seeing price hikes.

Rising prices will cost the average household an additional £21.31 at the tills, the group said.

Kantar added that it expects inflation to continue, driving shoppers to seek out "cheaper alternatives".

Fraser McKevitt, head of retail and consumer insight at Kantar, said: "We expect inflation to continue to accelerate, and as a result we're likely to see consumers looking for cheaper alternatives."

He added that sales of supermarkets' own label products and discounters such as Aldi and Lidl stand to benefit.

The German duo both hit record high market shares over the past 12 weeks and now have a collective 11.7% share of the market.

Aldi's market share rose from 6% to 6.8% in the 12 weeks to March 26, and Lidl saw its share grow from 4.4% to 4.9%, according to Kantar.

Aldi boss Matthew Barnes said: "As inflation begins to stretch household budgets consumers will increasingly look for opportunities to reduce their grocery bills."

"Our model means that we can continue to offer our customers outstanding value for money and guarantee the prices they pay ... are the lowest in Britain."

Separately, figures from Nielsen also show Aldi's market share rising 0.9% to 8% in the 12 weeks to March 25, compared to a year earlier, while Lidl increased 0.5% to 5.3%.

Nielsen figures showed that Tesco held the top spot among UK grocers, clocking only a marginal 0.5% drop to capture 27.1% of the market.

Sainsbury's saw its own market share fall 0.4% to 15.4%, while Asda dropped 0.5% to 14.1% and Morrisons held on to 10%.

Kantar also flagged the increasing popularity of "free from" food, such as gluten or dairy-free products.

Demand for these items, particularly from younger shoppers, helped boost the category by 36% year on year.

Meanwhile, Nielsen retail data pointed to a drop in spending on discounted and promotional items which fell to an 11-year low of just 26%.

But rather than signalling a willingness to pay more at the till, Nielsen said it marks the introduction of permanent price cuts amid stifling competition.

"The last few years have seen about a third of the typical supermarket shopping bill going on promotional items," Mike Watkins, Nielsen's UK head of retail and business insight said.

"However, to be more price competitive, supermarkets have turned temporary price reductions into permanent cuts, so there's less promotional activity as many prices are cheaper all-year round.

"There's also been a shift away from multi-buy to simpler price cuts, which is in tune with shopper needs to make it easier to manage their basket spend."

Overall, Nielsen said supermarket sales over the four-weeks to March 25 fell 2.6% versus the same period in 2015, but the comparative drop has been blamed on the late timing of the Easter holiday this year rather than a spending slowdown.

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