–UK BRC Nov Shop Prices 0.1% M/M; +2.0% Y/Y
–UK BRC Nov Food Prices 0.2% M/M +4.0% Y/Y
–UK BRC Nov Non-Food Prices Unchanged; 0.9% Y/Y

LONDON (MNI) – UK shop price inflation reamined extremely subdued
in November, rising by just 0.1% on the month and rising 2.0% on the
year, the latest British Retail Consortium-Nielsen Shop Price Index.

The overall index was boosted by food price inflation which rose
0.2% on the month and by 4.0% on the year, while non-food shop price
inflation was flat on the month and up just 0.9% on the year.

In October, the SPI rose 0.3% on the month and 2.2% on the year.
Food inflation registered 0.3% and 4.4% rates of growth respectively
while non-food was 0.3% and 1.1%.

The latest reading suggests that non-food retail level inflation
remains very restrained.

Stephen Robertson, British Retail Consortium Director General,
said strong competition in the retail sector is preventing cost
pressures from feeding through into shop prices:

“A fall in food inflation to four per cent shows the highly
competitive grocery market is keeping costs down for customers in the
run-up to Christmas. There’s been no fundamental change in the upward
pressure coming from higher costs for wheat and other commodities but
stores are holding back the full force of these rises”.

“Thirty eight per cent of fast-moving consumer goods are currently
on some form of offer, which is an all-time high. On non-food goods too,
discounts and special offers have started well ahead of the traditional
January sales, as the dip in overall shop inflation demonstrates”.

The survey bolsters the case made by senior Bank of England
policymakers that inflation is being driven by one-off effects, such as
VAT, energy prices and the fall in sterling.

Mike Watkins, Senior Manager, Retailer Services, Nielsen
said that the retail sector could face a squeeze as the VAT
increase comes in at the start of 2011:

“Whilst it is good news for shoppers that the rate of change in
shop prices has slowed this month there is still upward pressure from
ambient food and non-food price increases are being held due to seasonal
price cutting. We remain concerned about the underlying inflationary
pressures and the VAT increase in January and whether this impacts the
motivation of the already cautious consumer. In the run up to 31
December we expect retailers to keep promoting heavily and discounting
to lower levels in order to drive footfall.”

–London newsroom: 4420 7634 1655 email: ukeditorial@marketnews.com

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