Shop prices are rising across the UK's supermarkets once again for the first time since 2014, according to fresh industry figures by Kantar Worldpanel.
After 28 months of deflation in the market, like-for-like grocery prices have increased by 0.2 percentage points to bring a return to inflation.
The sector has been warning that prices will have to go up to cover higher costs as a result of a weaker pound. The rise of the discounters, Aldi and Lidl, had led the major supermarkets to slash prices in order to hold onto shoppers. However, the return of inflation suggests that the bitter price war might be drawing to an end.
Grocery inflation now stands at 0.2pc over the 12 weeks to January 1, according to Kantar.
Supermarket sales grew by 1.8pc over the period as shoppers splashed out over Christmas, according to Kantar. Consumers spent around £480m more at the tills last month than they did in December 2015, leading to record sales.
"The typical household spend for December reached £365 this year – £52 more than the average month," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
The 'big four' supermarkets together accounted for 71.4pc of market share, with a sales increase of 0.1pc – the first time that all four have collectively grown since June 2014.
Tesco's turnaround was given a fresh boost with a 1.3pc sales increase helped by improvements to its fresh food range. However, its market share fell back by 0.1 percentage points to 28.2pc - indicating that it lost customers to rivals.
Sainsbury’s saw a marginal sales decline of 0.1pc, although it enjoyed a record Christmas online. Asda sales slipped 2.4pc, marking it as the worst performer among the big four, although this was a considerable improvement on the 4.7pc decline reported a month earlier.
Meanwhile Morrisons grew total sales by 1.2pc over the 12-week period. The Bradford-based supermarket has separately reported that in the nine weeks to January 1 total sales were up 2pc, suggesting that it enjoyed a strong run-up to Christmas, too.
Iceland was a star performer with sales growing by 9.6pc, helped by the publicity surrounding its mince pies outranking Harrods in taste tests. Co-op sales also continued their upward trajectory, posting a 2.4pc lift.
Elsewhere discounters Aldi and Lidl benefitted from improving their premium lines at a time when shoppers typically 'trade up' in favour of the bigger chains. They have also been opening new stores at a rapid clip in order to seize more of the market.
Aldi sales grew by 11.8pc, taking its market share to 6pc, compared to 5.5pc a year earlier. Lidl's sales rose by 7.5pc, taking its market share to 4.4pc over the 12 weeks.
As I said at the time, prices were hiked in the run-up to Xmas to make the sales figures look better than they really were.
