BRC: UK Aug Deflation Slows; Non-Food Weakest Since April 2013

BRC: Shop Price Deflation 0.3% in August Versus 0.4% fall in July

By David Robinson

     LONDON (MNI) - UK high street deflation eased in August, with non-food

deflation at its shallowest since April 2013, the BRC's latest Shop Price Index

(SPI) showed.

     The BRC SPI showed deflation of 0.3% on the year in August compared to 0.4%

in July which, excluding June, was the shallowest deflation since November 2013.

Non-food products were down 1.3% on the year, the weakest deflation rate for

this sector since April 2013.

     Headline official UK data has shown consumer price inflation climbing above

the Bank of England's 2.0% target while the SPI has shown high street deflation

evaporating. 

     Electronic goods deflation in August was the lowest in the history of the

SPI, which started in 2006. Sterling weakness is reported to have put upward

pressure on electronic goods, with large chunks of the market relying on

imported goods.

     Currency hedging cushioned many businesses from the initial plunge in

sterling following the June 2016 referendum but the effects of the devaluation

are now being felt.

     "The reality is that with protection from hedging policies coming to an

end, non-food retailers are running out of options for protecting shoppers from

the significant increases in the price of imported goods since ... We expect

non-food prices to continue trending towards year on year inflation," Helen

Dickinson, BRC Chief Executive, said.

     Food inflation rose in August, to stand up 1.3% on the year compared with

up 1.2% in July, with softer fresh food inflation offset by higher prices in the

ambient (food altered to prolong shelf-life) sector.

     Ambient food prices were up 1.9% in August compared to 1.6% in July, the

sector's highest inflation rate since December 2013.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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