Shop price inflation sees highest annual increase since October 2008

Shop price inflation increased last month to its highest rate since October 2008. The British Retail Consortium said that higher food and petrol prices resulted in a rise to 2.9% in June from 2.3% in May.

The BRC-Nielsen Shop Price Index found that food inflation rose to 5.7% from 4.9%, which was the biggest rise since May 2009. Non-food inflation increased to 1.3% from 0.8%. On a monthly basis, non-food prices rose by 0.5%, while food inflation grew by 0.6%.

RC said the rise was being driven by surging world commodity prices, the effect of the weak pound on import costs and higher VAT - all factors beyond retailers' control. The lobby group added that food price inflation was running well below consumer price inflation, and that 39% of all grocery items bought were on promotion.

Stephen Robertson, BRC Director General said “Headline food inflation is up, but 39% of grocery spending is going on promoted goods, showing there are lots of offers available and savvy shoppers are taking advantage to minimise the impact on real-life bills.

“Considering January’s VAT rise, non-food inflation is still very low.

“The latest bout of retail administrations shows how weak consumer spending is. Retailers are using discounts to generate sales at the expense of margins. Sales have started earlier this year, especially in clothing and footwear, where prices are actually cheaper than a year ago.”

Source : The Retail Bulletin
www.theretailbulletin.com/news/shop_price_inflation_rises_to_highest_rate_since_october_2008_06-07-11/