–UK BRC June Shop Prices Up 1.5% y/y vs Up 1.8% y/y May
–UK BRC June Shop Prices Down 0.1% m/m vs Up 0.3% m/m in May
–UK BRC June Food Prices Up 1.7% y/y; Non-Food Up 1.4% y/y

LONDON (MNI)- UK shop price inflation fell for the second month in
a row in June, with declines in food and non-food inflation and
deflation in some sectors, according to the British Retail
Consortium-Nielsen Shop Price Index (SPI).

The BRC shop price index rose 1.5% year-on-year in June, compared
with 1.8% in May, and the lowest rate since March. Month-on-month, shop
prices fell 0.1%, versus an increase of 0.3% in May. The clothing and
footwear, electrical goods and books and home entertainment sectors all
experienced deflation in June.

The BRC said the decline in shop prices was driven high levels of
promotional activity, fierce competition amongst retailers and by a
sharp fall in food inflation. BRC Director General Stephen Robertson
predicted low and stable inflation for the rest of the year.

Food inflation fell to an annual rate of 1.7% in June from 2.2% in
May. In monthly terms, the food inflation rate fell -0.1%. Ambient food
inflation fell to 4.1% year on year versus 4.4% in May. Monthly ambient
food inflation fell markedly, dropping to -0.4% versus 1.6% in May.

Fresh food prices for the year slowed to 0.1% in June, down from
0.7% in May. Month on month, fresh foods prices were unchanged compared
to -0.3% in May.

Non-food inflation also decelerated slightly in June to 1.4%
annually from 1.6% in May. The monthly non-food inflation rate was flat
versus up 0.2% in May.

Within the non-food sector clothing and footwear was down 0.1% on
the year, electrical goods down 2.0% and books, stationary and home
entertainment down 0.8%.

The most recent National Statistics data, for May, showed food
inflation falling, to 1.2% on the year from 2.6% in April and has shown
deflation in clothing and footwear every month of this year.

Stephen Robertson, British Retail Consortium Director General said:

“The era of shop price volatility seems over for now. Low and
stable inflation appears likely for the rest of the year. The
fluctuations in commodity costs and exchange rates over the last 18
months have now fed through. Barring any major shocks, we’re not
expecting sharp movements in price.”

The BRC warned, however, the rise in VAT to 20% in January next
year could see a sharp rise in the annual inflation rate at that time
and add to inflationary pressure throughout year.

Robertson said:

“In the face of weaker demand, retailers will continue to use
widespread discounts and promotions. But, given their thin margins,
there will be little scope to absorb next year’s VAT increase. This will
put significant pressure on inflation from January onwards.”

-London newsroom: 4420 7862 7491; email: wwilkes@marketnews.com

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