MNI: UK June Shop Prices Mark 62nd Month of Deflation -- BRC

--UK June Shop Prices Down 0.5% y/y, Following May's 1.1% Decline

     LONDON (MNI) - According to data from the British Retail Consortium, UK

shop price deflation eased to 0.5% y/y in June from 1.1% in May. Nevertheless,

shop prices have now registered 62 months of decline. On a monthly basis, the

BRC Shop Price Index (SPI) posted a rise, was up 0.5% on May, when prices had

fallen back by 0.2% m/m.

     The softening in the headline annual figure was driven by a 1.6% easing in

non-food prices -- although this was a more moderate drop than the 2.5% decline

seen in May.

     Food prices, meanwhile, ticked higher by 1.2% y/y in June, unchanged from

May's growth rate. This result is consistent with the wider picture of steady

food price inflation, amid an environment in which retailers are resorting to

competitive pricing and deals in order to contend with a tough trading

environment.

     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.

     "Food inflation across retail stores is holding at the same level as last

month, which is good news for shoppers and helpful to retailers as the

continuation of summer weather is supporting sales of seasonal fresh foods...

However, pricing in the non food channel is more challenging and after many

months of deflation and recent weaker demand, prices are still lower than a year

ago, " said Mike Watkins, Head of Retailer and Business Insight at Nielsen.

     According to Helen Dickenson, Chief Executive of the British Retail

Consortium, food retailers will struggle in the tough trading environment.

     "Food shoppers can breathe a sigh of relief with the rate of food inflation

remaining steady and retailers continuing to fight back against a tough trading

environment with competitive pricing and deals," she said.

     "For non-food, there's been an easing in deflation largely driven by some

retailers bringing forward the introduction of new ranges this year. This effect

on the index will be temporary and, given the strength of the competitive

pressures in the industry, we're likely to see non-food prices slide further

into deflation in coming months," Dickenson added, noting that the easing in

deflation for non-food prices is likely to be temporary. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

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