–Acceleration In Y/Y Food Inflation Seen Key Factor
–BRC/Nielsen Warn On Further Food Inflation If UK Drought Persists

London (MNI) – Annual inflation in UK shops accelerated for the
first time in five months in March, fueled by rising food prices,
according to the British Retail Consortium-Nielsen Shop Price Index.

Annual shop inflation was 1.5% last month, up from 1.2% in
February, the latter its slowest clip since March 2010.

BRC-Nielsen blamed the acceleration largely on food prices, which
posted their biggest rise since August 2010.

A surge in food price inflation outweighed worsening non-food
deflation, the survey showed.

The month-on-month comparison showed shop prices flat last month
after rising 0.5% in February.

Non-food prices fell faster on the year after turning deflationary
in February for the first time since November 2009. Non-food reported
deflation of 0.9% on the year, with the rate falling 0.4% on the month.

This is the fastest rate of fall since November 2009 when the
deflation rate was 1.2%. Clothing and footwear and the electricals
sub-categories continued to report deflation.

Annual food price inflation accelerated to 5.4% from the 4.2% seen
in February, the fastest acceleration in the rate since August 2010.

Ambient food inflation is at an eight-month high at 6.6% on the
year while fresh food inflation rose to 4.6%, a nine-month high.

BRC/Nielsen noted that retailers face increasing supply costs,
while higher energy and transport costs also seem to be flowing through
the supply chain.

In his latest 2012-13 Budget speech, Chancellor of the Exchequer
George Osborne outlined measures which the ONS estimates will push
monthly rates for CPI and RPI up by 0.38% and 0.41% respectively.

The BRC warned of further food-fueled inflation pressures ahead
should drought conditions in the UK persist. w

–London Bureau; Tel: +44 (0)207 862 7485; email:

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