–UK BRC Sep Shop Prices Up 1.0% y/y Versus up 1.1% y/y Aug

LONDON (MNI) – Shop price inflation dipped in September, with food
inflation holding steady despite higher global agricultural and
livestock prices.

The headline September Shop Price Index was up 0.1% on the month to
stand up 1.0% on the year, down from 1.1% in August, with food price
inflation unchanged at 3.1% on the year and non-food inflation dipping
to -0.2% from -0.1%.

The near-term stability of food prices in the face of rising
agricultural commodity prices is in line with the Bank of England’s
predictions in the August Inflation Report.

That report noted the rise in agricultural and livestock commodity
prices but said “the effect on CPI inflation is likely to be modest and
it will take time for international food price pressures to feed through
the supply chain into UK food prices.”

Food price inflation has fallen from 5.0% on the year in September
2011 to hold steady at 3.1% in July through September.

The overall Shop Price Index has fallen from 2.7% in September last
year to hold in a 1% to 1.1% range in June through September.

“Food inflation remains at a two-year low for the third month
running despite inflationary pressures building up in the supply chain
from rises in global commodities such as wheat and soya beans,” Stephen
Robertson, British Retail Consortium Director General, said.

The BRC said some 35% of food brought in supermarkets is on
promotion. Many of these offers are not reflected in the official
inflation data or in the BRC’s survey, however. National Statistics, for
example, takes no account of such things as “two-for-one” offers and the
BRC survey echoes the official methodology.

“The actual rate of food inflation experienced by households in the
UK is lower than our headline figure suggests,” the BRC said.

It nevertheless warned that the rise in commodity prices posed “a
major upside risks to prices in the coming months.”

Fresh food inflation has already picked-up, rising to 3.0% on the
year in September from 2.5% in August, in part due to a sharp rise in
vegetable prices.

Ambient food, that is food altered to extend its shelf-life, saw
its yearly inflation rate ease to 3.2% in September from 4.0% in August.

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

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