MNI: UK July Shop Price Deflation Lowest in 8 Months -- BRC

--UK July Shop Prices Down 0.3% y/y vs -0.5% in June

     LONDON (MNI) - UK shop price deflation continued to ease in July,

moderating to an eight-month low, data from the British Retail Consortium (BRC)

showed Wednesday.

     The BRC-Nielsen Shop Price Index (SPI) declined by 0.3% y/y in July,

softening from a 0.5% drop in June, courtesy of both higher food prices and a

slower deceleration in non-food prices. Despite the overall easing in deflation,

shop prices have now registered 63 consecutive months of decline.

     On a monthly basis, the SPI posted a 0.5% fall, countering the 0.5% rise

recorded a month prior.

     The softening in the headline annual figure was driven by a 1.4% easing in

non-food prices -- which saw the lowest rate of deflation in 18 months --

following declines of 1.6% and 2.5% in June and May respectively.

     Food prices, meanwhile, ticked higher in July, up 1.6% y/y, 0.4pp higher

than June's growth rate. Partially explaining this were higher vegetable and

fruit prices, attributed to a colder-than-normal spring and a more recent

prolonged dry period.

     According to Helen Dickenson OBE, Chief Executive of the British Retail

Consortium, higher food prices may not be going away anytime soon.

     "We expect this period of food price inflation to continue in coming months

as despite global oil, food and commodities prices shrinking recently, the hot,

dry conditions we have seen across the northern hemisphere means the pressure on

prices will continue for some time to come," she said.

     The SPI covers only a slice of the UK consumer price basket, with the

non-food element of the index covering some of the same ground as core goods

inflation in the official data.

     "The slight increase in food inflation over the early summer has been

offset by increased demand for food and drink as the result of the heatwave and

incremental spend around the World Cup. On the non-food high street, retailers

are maintaining the level and depth of price cuts and promotions to help drive

footfall over the holiday period, " said Mike Watkins, Head of Retailer and

Business Insight at Nielsen.

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

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