Tesco has seen its share of the UK grocery market fall to its lowest level for seven years, according to data issued by Kantar Worldpanel.

The UK’s largest retailer accounted for 29.7% of UK grocery sales in the 12 weeks to 19 February, Kantar said today (28 February). The last time Tesco’s market share was at that level was in May 2005, the analysts added.

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Kantar reports absolute rather than like-for-like sales, which excludes the contribution from new stores. It said Asda, the second-largest retailer, maintained its “record” share of 17.5% due to the conversion of the former Netto stores it acquired last year.

Morrisons’ market share dipped from 12.3% to 12.2%, while Sainsbury’s, the UK’s third-largest grocer, increased its market share from 16.5% to 16.6%.

Elsewhere, the “Two Nations phenomenon” continued, Kantar director Ed Garner said, with upmarket retailer Waitrose, discounters Aldi and Lidl and frozen food retailer Iceland Foods all increasing sales at a faster rate than the market as a whole.

“Waitrose saw its share rise this month to 4.5% − an all-time record for the retailer. Its continuing strong performance shows that it is a mistake to talk about the average UK shopper Some consumers clearly value good service and instore experience when shopping, which Waitrose claims to provide,” Garner said. “The retailer has also benefitted from increasing numbers of shoppers, as its store expansion makes its shops accessible to more people.”

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He added: “At the same time, the Two Nations phenomenon continues as value for money remains paramount for many shoppers, with Aldi, Lidl and Iceland all enjoying double-digit growth as they hold on to record shares.”

The UK grocery market grew by 4.5% during the 12-month period. Food inflation was at 5.5%, the third consecutive fall since a peak of 6.2% in November. Kantar said it expected “further decreases” in 2012.