–UK BRC Mar Shop Prices Up 1.2% y/y Vs up 1.7% y/y Feb
–UK BRC Mar Shop Prices Unch. m/m Vs Up 0.6% m/m Feb
–UK BRC Mar Food Prices +1.2% y/y; Non-Food +1.3% y/y
–UK BRC Mar Food Price Inflation Lowest In Data Series

LONDON (MNI) – UK shop price inflation declined further in March
from its January peak, according to the British Retail
Consortium-Nielsen Shop Price Index.

The BRC shop price index was up 1.2% on the year in March, down
from 1.7% in February and 2.3% in January, hitting its lowest level
since November. The data reinforce the belief UK inflation may have
peaked in January, when the official consumer price index was up 3.5% on
the year, before falling to 3.0% in February.

On a month-on-month basis shop prices were flat after rising 0.6%
in February.

The decline in shop price inflation in the BRC series is due in
part because of the weakness of food price inflation. Food prices in
March were up 1.2% on the year, the lowest level since the BRC series
began in December 2006.

Ambient food – food treated for a longer shelf life – saw its
year-on-year price change fall to 2.2% in March from 3.6% in February,
hitting its lowest level since September 2007.

Ambient food prices are on a clear downtrend. The BRC said that a
twelve-month rolling average showed ambient food inflation at 4.4%,
while the six month rolling average was 3.6%.

Fresh food inflation climbed to 0.5% in March from February’s
record low of 0.3%.

Non-food prices in March were flat on the month and up 1.3% on the
year, down from the 1.9% rise seen in February and now at their lowest
level since November.

The softening high street inflation comes despite the reversal of
the value added tax cut, which kicked in in January.

A January survey by the Bank of England’s agents showed 46% of
retailers said they would pass the rise in VAT on in its entirety, 33%
planned to pass through less than half of it and 17% did not plan to
pass it on at all.

In its analysis on the data, BRC-Nielsen cited the BOE agents’
survey and said their findings support the view the VAT reversal is not
being passed on in full.

The BRC-Nielsen data suggest “that conditions of weak consumer
demand and spare capacity in the economy are bearing down on prices and
consequently retailers are absorbing a large slice of this inflationary
pressure into their margins,” they said.

— London newsroom: +44 207 86 27491 email: drobinson@marketnews.com

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