* Sales up 2.6 percent in 12 weeks to March 20
* Grocery price inflation up 4 percent
* Aldi, Lidl sales jump over 10 percent
* Sainsbury, Morrison slightly outperform the market
LONDON, March 29 (Reuters) - Britons have been cutting back on groceries, data showed on Tuesday, adding to signs of a rapid deterioration in consumer confidence which, economists fear, could derail an economic recovery.
Market researchers Kantar Worldpanel said grocery sales rose 2.6 percent in the 12 weeks to March 20, down from 3.9 percent growth in the 12 weeks ending Feb. 20, as shoppers economise amid rising prices.
Grocery price inflation was 4 percent, ahead of market growth for the first time since July 2009.
Hard discounters Aldi and Lidl continued to enjoy double-digit percentage rises in sales. However, they are seeing existing customers spend more with them, rather than a big influx of shoppers from rivals, Kantar said.
"While there are no signs yet of the explosive growth in economy own-label ranges, that we saw in 2008, there are now clear indications that value-for-money is driving retailer performance," communications director Ed Garner said.
British retailers have reported a sharp slowdown in demand since the start of the year as prices climb and government austerity measures start to bite.
Weaker than expected sales from supermarket group J Sainsbury sent shockwaves through the sector last week as grocers have been viewed as resilient retailers because of their focus on essential items.
Among the top four grocers Sainsbury and Wm Morrison grew slightly ahead of the market, while Tesco and Asda slipped behind.
Following is a summary of market share and sales:
12 wks to 12 wks to percent change
Mar 20, 2011 Mar 21, 2010
(million sterling) (million sterling) Total till roll 30,504,610 29,802,090 2.4 Total grocers 22,785,540 22,197,440 2.6 Total multiples 22,255,110 21,670,590 2.7
Market share (percent):
12 wks to 12 wks to percent change
Mar 20, 2011 Mar 21, 2010 in sales Tesco 30.2 30.3 2.3 Asda 17.0 17.1 2.1 Sainsbury 16.3 16.3 3.1 Morrison 12.2 12.1 3.1 Co-operative* 6.7 5.8 18.7 Somerfield* 0.1 1.7 -96.6 Waitrose 4.3 4.1 5.9 Aldi 3.1 2.8 14.8 Lidl 2.5 2.3 12.1 Iceland 1.9 1.8 4.2
* Somerfield was bought by the Co-Op in 2008 and some stores were sold to win approval from competition regulators.
(Reporting by Mark Potter; Editing by Dan Lalor)