Morrisons sales growth slows amid ‘highly competitive’ market

Susannah Streeter, chief investment strategist at Wealth Club, said: “Morrisons’ slowing sales growth underlines how intense the supermarket price wars have become in the UK.

“Shoppers are highly price-sensitive after years of penny-pinching habits formed during the cost-of-living crises.

“While inflation has eased off sharply from the peaks of recent years, households continue to search out value, forcing supermarkets to compete aggressively on price, promotions and loyalty schemes.

“Morrison’s second quarter like-for-like sales growth of 2.2 per cent down from 2.8 per cent in the previous quarter, suggests rivals are upping their game and the battle for market share is intensifying.

“However, there are signs that conditions could become a little more favourable for grocers.

“Today’s inflation figures showed that food and non-alcoholic beverage inflation slowed to 2.2 per cent in May from three per cent previously, evidence that the food inflation shock is continuing to fade.

“This may help rebuild consumer confidence given that it leaves households with more spending power.

“If shoppers feel less stressed by costs at the checkout, they may be more willing to trade up to premium ranges, spend more on discretionary items or pile up trolleys higher.

“The recent retreat in oil prices in recent days also offers offer grounds for optimism, given that if lower energy costs hang around, it’ll help reduce household bills as well.

“But given the competition across the market, operational efficiency and promotional pricing will remain critical if Morrisons has any hope of regaining market share, especially given the growing might of discount chains Aldi and Lidl.”