UK grocery inflation eased to 5.0% in August, down slightly from July’s 5.2%, according to Worldpanel by NIQ. While this marks the eighth consecutive monthly decline, the slower pace of improvement signals that food prices are still burdening household budgets—especially for key staples.

Despite this small drop, UK grocery inflation eases is more statistical than psychological. Households remain cautious, adjusting shopping patterns and cutting discretionary spending. Sales of branded products grew 6.1% year-over-year, outpacing own-label items, which rose by 4.1%. This trend suggests consumers are willing to spend more on select essentials while saving elsewhere.

Casual dining continues to suffer. Visits to pubs, restaurants, and cafés dropped 6% over the last month compared to a year earlier, indicating a preference for at-home consumption. Retailers that blend competitive pricing with accessible premium offerings are outperforming: Lidl and Ocado each posted 10.7% growth, followed by Tesco at 7.4%. In contrast, Asda reported a 2.6% decline, underlining growing gaps in value perception.

UK grocery inflation eases just as inflationary categories remain volatile. Chocolate, fresh meat, and coffee prices are still climbing. On the other end, champagne, sugar confectionery, and pet food saw minor price corrections, but not enough to offset broader cost pressures.

The sector’s momentum rests on how long elevated food inflation persists. Promotional activity has intensified, and consumers increasingly turn to loyalty apps and bulk-buy offers. However, sustained wage stagnation and high energy costs could dampen recovery in real spending power.

Retailers will need to maintain focus on flexible pricing models, loyalty retention, and operational efficiency to navigate the remaining turbulence in food inflation.