End of 'round pound' deals as supermarket price tag rises to £1.25

Supermarkets are increasingly pricing budget items at £1.25 rather than £1 as they balance attempts to draw in shoppers through bargain deals with stubbornly high grocery inflation.

- Julia Kollewe and Sarah Butler

It is now frequently the joint second most popular price tag for a grocery item, alongside £2 and behind £1, according to the data firm Kantar.

Supermarkets typically use "round pound" deals to sell budget items, but have been forced to raise prices.

Grocery inflation has eased to its lowest level this year but remains high, Kantar said yesterday.

Annual grocery inflation in Great Britain declined to 16.5% in the four weeks to 11 June, down from 17.2% last month and a record 17.5% in March. The biggest price rises were for eggs, cooking sauces and frozen potato products.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said: "Traditionally, 'round pound' prices have been attractive to shoppers, who find them easier to relate to and practical as well, with no leftover change.

"But, with retailers eager to offer value and cash buying less popular, £1.25 has emerged as an increasingly important price point."

The Kantar figures came a day before the official UK data on overall inflation, which is expected to show an easing to 8.4% in May from 8.7% in April. Rishi Sunak's pledge to halve inflation this year is at risk from stubbornly high food inflation, which has kept the headline rate at a higher than expected level.

McKevitt said: "This is the lowest rate of grocery price inflation we've seen in 2023, which will be a relief to shoppers and retailers.