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UK supermarkets' sales growth slows in February, NIQ says

A customer puts groceries inside a reusable bag at the self-checkout inside a Sainsbury’s supermarket in London

LONDON (Reuters) - Sales growth at British supermarkets slowed to 5.3% in February, from 6.6% in January, reflecting a fall in food inflation, industry data showed on Tuesday.

Market researcher NIQ said food price inflation decreased to 5.0% last month from 6.1% in January.

It said 24% of all FMCG (fast moving consumer goods) sales were bought on promotion in the four weeks to Feb. 24, rising to 35% for branded goods, up from 31% a year ago. It was 16% for own-label items, up from 13% a year ago.

“Whilst industry volumes remain positive, many brands are now chasing growth having lost category share during the high period of inflation," said Mike Watkins, NIQ’s UK head of retailer and business insight.

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He forecast levels of promotion would continue to creep up over the next few months.

"With Euro 2024 and Paris Olympics on the horizon, branded promotions will be the drivers of increased discretionary spend post Easter," he said.

NIQ said online grocer Ocado and Marks & Spencer were the UK's fastest growing grocers in the 12 weeks to Feb. 24, with year-on-year sales growth of 12.2% and 11.9% respectively.

Market leader Tesco and No. 2 Sainsbury's also won market share with sales growth of 6.8% and 8.0% respectively.

Sales momentum at German-owned discounters Aldi and Lidl slowed, with growth of 6.0% and 10.4%, while Asda and Morrisons were again the laggards with growth of 2.0% and 3.6%.

Separately on Tuesday, a survey from the British Retail Consortium showed overall UK spending slid in February as bad weather kept shoppers at home and households remained cautious in the face of high borrowing costs and inflation.

(Reporting by James Davey; Editing by Aurora Ellis)