Food Inflation Down as Currency Effects Subside: BRC/Nielsen

--July Overall Shop Price Inflation -0.4% y/y vs -0.3% y/y in June

By Jamie Satchithanantham

     LONDON (MNI) - Overall shop price inflation reduced slightly in July

courtesy of a drop in the growth of food prices, a survey released Wednesday

showed.

     The Nielsen British Retail Consortium Overall Shop Price Index slipped 0.5%

on the month, nudging the annual rate of price growth down to -0.4% y/y from

-0.3% in June. 

     The softening in price growth was observed across both the food and

non-food categories.

     Food prices fell 0.2% on the month, enough to move annual price growth down

0.2pp to 1.2% y/y. Despite the fall this is still the third highest food

inflation figure since the January 2014 when it stood at 1.1% y/y. 

     Within the category, Fresh Food saw prices grow 0.4pp slower in July,

falling to 1.0% y/y, while Ambient Food inflation (goods generally found on shop

shelves) picked up 0.1 percentage points to 1.6% y/y. 

     Non-food goods declined 0.6pp on the month, taking year-over-year growth

down to -1.5% y/y in July from -1.4% y/y in June.

     According to the BRC, the slowdown in food inflation was attributed to a

slowdown in the upward inflationary impact from the currency deprecation on

fresh food, while non-food inflation was being contained by the prices of some

core goods being kept down by retailer competition. 

     "July saw lower food price inflation than in June, bringing the march of

overall shop prices towards inflationary territory to a halt, for now at least,"

said Helen Dickinson, Chief Executive of the BRC.

     "Notwithstanding pressures on shop prices, further increases in inflation

in other areas of the consumer spending basket are likely in coming months. That

will put UK households' already squeezed finances under increasing strain," she

added. 

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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