–UK BRC Mar Shop Prices Up 2.4% y/y Versus up 2.7% y/y Feb
–UK BRC Mar Food Prices Up 4.0% y/y; Non-Food Up 4.5% y/y
–UK BRC Mar Non-Food Prices Up 1.5% y/y; Non-Food up 1.6% y/y

LONDON (MNI) – Shop price inflation eased a little in March, having
hit its highest level since November 2008 in February, according to the
British Retail Consortium-Nielsen Shop Price Index (SPI).

Despite a slight easing in the pace of costs, the BRC survey shows
the SPI remains several percentage points above the BOE’s 2.0% inflation
target, coming in at 2.4% on the year in March, down from 2.7% in
February.

And the BRC warned that the recent surge in oil prices and
uncertainty surrounding supply will continue to put upward pressure on
prices over the coming months.

But an increased number of price-cutting promotions appear to have
tempered the pass-through effects of rising global commodity prices on
inflation in March, the BRC said.

The BRC data showed shop prices fell O.3% on the month in March,
following a VAT-hike fuelled 0.7% rise in February. Food prices were up
4.0% on the year while non-food prices rose 1.5%.

On a monthly basis non-food prices slipped 0.2% while food prices
dropped 0.5%, despite continued upward pressure from commodity prices.

“Global commodities are still exerting considerable upward pressure
on retailers’ costs, but a greater intensity of promotions has led to a
fall in year-on-year food inflation which will come as a great relief to
hard-pressed families,” Stephen Robertson, British Retail Consortium
Director General, said.

“Over the shorter term, food was actually cheaper in March than
February. It’s a clear demonstration of competition in the retail sector
keeping costs down for shoppers. The proportion of groceries going
through the tills on promotion has reached a new all-time high of 40%,”
he said.

“The consistently low rate of inflation for non-food goods shows
retailers are still absorbing much of the VAT rise themselves.”

Economists at JP Morgan said in a recent note that the BRC shop
price data provide only “a very imperfect guide” to the official
consumer price outturns, although there is co-movement between food and
non-food components of the SPI and the official data outturns for these
sectors.

–London newsroom: +44 20 7 862 7492; email: wwilkes@marketnews.com

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