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Shop price inflation up marginally
Feb '08
Year-on-Year: The BRC-Nielsen Shop Price Index for January 2008 showed that shop prices were 1.2% higher than a year ago, up from 1.0% in December. Accelerating food price inflation and non-food prices continuing to fall, but at a slower rate, have produced this overall increase in shop prices.

Food prices have been driven up by ambient goods where promotions finished after the festive period. In the non-food sector, heavy discounting, which started pre-Christmas to stimulate demand, came to an end, slowing the rate of deflation.

Month-on-Month: On a month-on-month basis prices fell by 0.5% between December and January, the first decrease in six months. A decrease in prices in the non-food sector, due to discounting in the traditional January sales, outweighed inflationary pressure coming from food which saw prices rise by 0.5% compared with November's 0.1% increase.

The BRC's new Director General, Stephen Robertson, said:
“It's striking that non-food prices have now been lower than a year ago for the past fourteen months. Talk of rocketing food prices is a wild exaggeration. Intense competition between food retailers continued to protect customers, as retailers absorbed much of the impact of rising costs themselves.

“While very little inflationary pressure came from the high street, households faced dramatic increases elsewhere in their domestic budgets. What needs to be done now to boost fragile consumer confidence is for the Bank of England to make a series of momentum building rate cuts. This would avoid the need for Fed-style panic reductions later on.”

Mike Watkins, Senior Manager, Retailer Services, Nielsen comments:
“After a frantic November and December when food retailers relied heavily on promotions to drive sales, January saw the traditional return to regular pricing across many categories. There was only a slight increase to overall food and drink prices and this is indicative of the degree of competition for shoppers, in particular between the top four grocers.”

British Retail Consortium

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