–UK BRC Dec Shop Prices Up 2.1% y/y Versus up 2.0% y/y Nov
–UK BRC Dec Shop Prices Up 0.2% m/m Versus up 0.1% m/m in Nov
–UK BRC Dec Food Prices Up 4.0% y/y; Non-Food up 1.1% y/y

LONDON (MNI) – Shop price inflation moved higher in December, with
non-food inflation accelerating, according to the British Retail
Consortium-Nielsen Shop Price Index (SPI).

The BRC Nielsen SPI showed fresh food prices spiked higher in
December but ambient food – food altered to extend its shelf life at
room temperature – saw prices fall. Non-food inflation hit its highest
level since June.

While the data add to the evidence of mounting UK inflation, they
show no sharp pick-up.

Overall shop prices were up 2.1% on the year in December from up
2.0% in November and up 0.2% on the month.

Non-food prices rose to up 1.1% on the year from up 0.9% in
November and were up 0.2% on the month. Food prices were up 4.0% on the
year, unchanged from November, and up 0.2% on the month.

The most marked change came in ambient and fresh food prices.
Ambient prices were down 0.5% on the month and up 5.5% on the year
compared to up 6.1% in November. Fresh food prices were up 0.6% on the
month and up 3.0% on the year, compared to up 2.6% in November.

“Overall shop price inflation is well below the wider Consumer
Price Index, though price increases in some non-food goods pushed that
figure up slightly compared with November. That’s consistent with
warnings from some retailers that inflationary pressures are working
through to prices,” Stephen Robertson, British Retail Consortium
Director General, said.

Robertson noted that a raft of input costs for retailers were well
up on the year, such as coffee, up 52%, wheat, up 45% and soya beans, up
38%.

Offsetting these cost increases in December retailers’ “price
discounting for Christmas was deeper and began earlier” this year, Mike
Watkins, senior manager, retailer services, at Nielsen said.

The December BRC shop price index is the last before the value
added tax hike kicks in January.

BRC Nielsen argued the impact of the VAT hike would be hard to
decipher.

“We expect to see a noticeable rise in non-food inflation, although
some of the impact will be lost among the vast number of discounts. The
snow is likely to have had a negative impact for many retailers in the
run-up to Christmas and so higher levels of discounts may be employed to
shift unsold stock. This will make the impact of the VAT increase even
harder to quantify.”

–London newsroom: 4420 7862 7491; email: drobinson@marketnews.com

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