UK shop inflation accelerated to 1.5% in October from 1% in September as food inflation increased to 4% from 3.1%, non-food prices remained mostly flat; food being hit by poor harvests, cost pressures after three months of stability: BRC

LONDON , November 7, 2012 (press release) – Overall shop price inflation accelerated to 1.5% in October from 1.0% in September. Food inflation increased to 4.0% in October from 3.1% in September. Non-food prices were broadly flat in October after falling 0.2% in September.

Stephen Robertson, British Retail Consortium Director General, said: "Overall shop price inflation is still low but pressure from food has edged it up. After three months of stability, food is being hit by a combination of poor harvests, rising production costs and previous commodity cost rises working through.

"In particular, the wet summer and higher feed costs are affecting vegetables and meat and poor supplies on world markets are making the ingredients for some manufactured foods more expensive.

"The good news is that a number of these costs have started to come down over the last quarter, which is likely to ease that pressure in the run up to Christmas. At the same time, promotions are widespread. A blizzard of vouchers is shielding hard-pressed shoppers from the full impact of rising costs.

"No change in the price of non-food goods compared with a year ago shows how relentless discounting is. Great for customers who are able to spend but, as retail administrations show, tough for retailers struggling to make the sums add up."

Mike Watkins, Senior Manager, Retailer Services, Nielsen said: "With weakened demand, there is intense price competition across all retail channels, especially on discretionary items, and this is keeping inflation low. However, it's difficult to predict the levels of retail sales in the run up to Christmas and, with cost price increases now being reflected in some food price inflation, this will inevitably make shoppers more cautious. Even so, with retailers maintaining promotional activity, there are sure to be some excellent deals out there for the savvy shopper."

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