–UK BRC Oct Shop Prices -0.3% m/m, +2.1% y/y
–UK BRC Oct Food Inflation -0.5% m/m, up 4.2% y/y
–UK BRC Oct Non-Food Prices Lowest Since Sep 2010

LONDON (MNI) – UK shop price inflation slowed in October after
steadying in September, with the food inflation rate slowing to 2.1%
year on year compared to September’s 2.7% annual rise, the latest
results of the British Retail Consortium-Nielsen Shop Price Index
showed.

The survey added that the annual rate is the lowest since December
2010, driven by a fall in food price inflation. On a monthly basis,
shop prices fell 0.3% compared to September’s 0.2% rise.

The food inflation rate fell half a percent month on month in
October versus up 0.1% in September, while the year-on-year growth rate
came in at 4.2%, down from 5% previously. Apart from March 2011, this is
the fastest decline in food prices since August 2009 when it fell 1.1%.

Non-food inflation rose 0.8% on the year, the lowest level since
September 2010 when it stood at 0.7% and compares to 1.3% the month
prior. Non-food shop prices fell 0.1% on the month compared with a
previous up 0.2%.

The fall is attributed to increased competition in the grocery
sector. Promotional activity has also increased in recent weeks, which
has led to a sharp fall in inflation.

This is also the 22nd straight month that inflation exceeded the
Bank of England’s target 2%. However the BRC also notes that this
competition between grocers has benefited households.

Fresh food inflation rose 3.5% on the year and fell half a percent
compared to September versus flat and 4.3%, respectively. Five out of
the seven sub-categories reported a slowing annual inflation, which
outweighed the rise in fruit and convenience food inflation.

Prices for ‘ambient’ food – tinned and packaged goods – fell to
5.3% in October, the lowest level since September 2010. The BRC adds
that inflation is likely to ease further as the fall in commodity prices
feeds through to prices.

Stephen Robertson, Director General of the BRC, says: “The
supermarket price war has had a dramatic effect. Food was 0.5% cheaper
in October than September. March saw an equivalent fall but there’s been
no bigger month-on-month drop in prices for over two years. As the
competitive battle intensifies, retailers are holding down shop prices
despite their own costs, including energy, property and what they pay
suppliers, going up.”

Mike Watkins, Nielsen’s Senior Manager of Retail Services, said
that it is “encouraging to see shop price inflation falling this month”
since “Christmas shopping is now underway and shoppers are having to
make their spending money go further this year.”

–Sanjukta Moorthy is a Reporter At Need To Know News, London;
tel: +44 (0)207 862 7485; email: sanjukta.moorthy@ntkn.com

[TOPICS: M$B$$$,MABDS$]