After grabbing market share at a speedy rate from the big national brands, private-label goods are losing some steam.

These cheaper retailer brands are still growing well, but their advance has slowed somewhat from their recent breakneck speed.

As private labels gained share during the downturn, investors turned jittery about the prospects for the big household brand names. One of the biggest concerns had been the possibility of sharp price cuts. A moderation in private label's growth rate could reduce some of the pressures on branded goods.

The trend could also be a slim sign that consumer fears are easing. "That abating negative sentiment is helping the branded part of the grocery store," said Edward Jones analyst Matt Arnold.

The changes in private-label penetration vary in different categories. A UBS analysis of about 10 different packaged food categories like ketchup and cheese found that in the four weeks ended May 16, private label's market share grew at an average 11%, a drop from the 21% growth those off-brand products saw at their peak around February.

In household goods categories like bleach and paper towels the analysts found that year-over-year market share gains for private label slowed to 10% in a recent four-week period, down from 18% early this year. UBS used Nielsen Co. data, which exclude Wal-Mart.

A confluence of factors are in play. As commodity prices have fallen, some of the big national brands are offering more price promotions to draw price-conscious consumers. Also, after cutting spending sharply "consumers are seeking affordable indulgences," says John Porter, a researcher for Information Resources Inc. That can make them more willing to spend on higher-priced daily goods.

Companies like Kraft Foods Inc. (KFT), ConAgra Foods Inc. (CAG) and Clorox Co. (CLX) - which all face tough private label competition - could benefit, UBS said.

In the salty snacks category, UBS analysts found that private label has begun to lose volume share as PepsiCo's (PEP) Frito-Lay brand narrowed its price gap with private label. Frito is adding more snacks per pack for some brands.

As the economy strengthens, consumers may be more willing to spend on higher-priced national brands. But grocers are likely to welcome such a tradeoff since they too benefit from higher sales for branded products and from improved consumer confidence, says Ann Gilpin, consumer analyst at Morningstar Inc.

Also, the grocery stores have invested heavily over the last few years to improve their in-store brands, which are seeing all-time high sales at some stores. Chains like Kroger Co. (KR) have plowed the added profits from private label into cutting costs in other areas. The recent investments in quality suggest that retailer brands will remain strong even as the economy rebounds.

"Private label is not going to recede to the way it was," said Information Resources Inc. researcher Tim Ressmeyer.

-By Anjali Cordeiro and Paul Ziobro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com