–UK BRC Aug Shop Prices Up 1.7% y/y vs Up 1.5% y/y Jul
–UK BRC Aug Shop Prices Up 0.1% m/m vs Down 0.1% m/m In Jul
–UK BRC Aug Food Prices Up 3.8% y/y; Non-Food Up 0.5% y/y
–UK BRC Aug Food Inflation Highest Since July 2009

LONDON (MNI) – Food price inflation rose to its highest level since
last July, driving overall shop price inflation up in August, according
to the British Retail Consortium-Nielsen Shop Price Index (SPI).

Food price inflation, on the back of a rash of crop failures around
the world, is the latest price shock hitting the UK, with the Bank of
England already having to contend with the pass-through from sterling
depreciation and the rise in value added tax set to come in at the start
of next year. The BRC Shop Price Index came in at up 1.7% on the year in
August, compared with up 1.5% in July.

Food prices rose 3.8% on the year, sharply up from 2.5% in July. In
contrast, non-food prices were up just 0.5% on the year, down from 1.0%
in July and at their lowest level since November.

BRC/Nielsen said the inflationary pressure seen in August was
“primarily supply-driven” – with retailers facing rising input costs not
only from food commodity prices, but also from increased cost of
freight.

The report said the 60% rise in wheat prices in the last 12 months
has impacted not just food products but also the cost of animal feed. It
cited concern over rises in meat prices, reflecting the growing cost of
animal feed and lower meat stocks in major-producing countries such as
Argentina and the US.

“Past rises in the cost of global commodities, such as wheat and
sugar, are filtering through to food prices. But we’re nowhere near the
return of the double-digit food inflation of two years ago,” Stephen
Robertson, British Retail Consortium Director General, said.

While food prices are a significant part of the official consumer
prices basket, the latest inflation numbers showed rising food prices
were offset by falls elsewhere.

In the consumer price index, food prices have a weight of 96 parts
in 1,000, that is they account for 9.6% of the basket, giving them
less weight than utility or transport costs.

The July CPI data showed food prices were up 3.0% on the year, with
food and non-alcoholic beverages having the biggest upside impact on
inflation, adding 0.16 percentage points to the change in the 12-month
rate. Offsetting falls elsewhere saw the 12-month rate drop 0.1
percentage points from July to 3.1%.

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

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