Real-terms market growth expected to continue at lower level throughout 2025-26
IGD has revealed that inflation is still the main driver of growth in the UK grocery market this year.
According to a detailed forecast from the retail insights organisation, real-terms market growth has advanced by 2.4 per cent, but inflation is still the largest contributor for overall market growth.
The report, ‘UK Retail Grocery Channel Forecasts’, includes predictions for in-store, online and convenience grocery shopping until 2029.
Real-terms growth is expected to continue at a lower level during 2025-26. And real market growth is not expected to rise above one per cent for the rest of the forecast.
Meanwhile, shoppers are still using money-saving tactics that they developed during the cost-of-living crisis.
Real wage growth is expected to return to its 2008 rate in 2026, although IGD anticipates a higher tax burden on households later in the forecast.
However, the retail analysts also found that convenience and online channels are set to see a large increase in sales over the next five years, while stores focus on expanding their fresh food offer with ranges catering to local shoppers’ needs.
Additionally, while supermarkets are predicted to see the highest growth in value, advances in technology are expected to propel the growth of online retail as the customer experience improves through wider product availability.
Senior analyst at IGD, Alex Rowberry, said: “IGD believes businesses should prepare for a mid-growth scenario: UK economic growth remains low, and inflation remains the driver of grocery market performance, as real market growth remains contracted.”
Head of UK insight at IGD, Rhian Thomas, added: “Our channel forecasts are uniquely comprehensive, and IGD’s insight at large is expanding to include in-depth analysis of non-food items in stores and the growing demand for in-store services.”
