MNI: UK October Shop Prices Back In Deflation -- BRC

--Shop Prices Down 0.2% y/y, Following September's 0.2% Rise

By Jai Lakhani

     LONDON (MNI) - UK shop prices ended their 2-month run of inflation in

October, falling by 0.2% y/y after a 0.2% rise in September, according to data

from the British Retail Consortium (BRC).

     On a monthly basis, the BRC Shop Price Index (SPI) was down 0.3%, compared

to a rise of 0.1% in September.

     Food price inflation fell to 1.3% y/y in October, down from 1.9% in

September and August, and 1.6% in July. The deceleration comes amid a global

slowdown in food prices, particularly in meat and dairy products and as the

effect fades of promotional strategies.

     Both fresh food and ambient food inflation slowed to 1.0% and 1.8% y/y

respectively.

     While non-food prices continued to decline, deflationary pressures were

stronger than in previous months. Non-food deflation deepened to 1.1% in October

y/y, after 0.9% in September.

     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.

     "As we approach the Christmas period, retailers are facing stiff

competition; driving down the prices of many goods including clothing and

electricals. This comes at a particularly difficult time, with lower consumer

demand, a weak pound and rising public policy costs all putting pressure on

retail margins," said Helen Dickinson, Chief Executive at the British Retail

Consortium.

     She added that the UK government budget did not do enough in terms of

alleviating pressures businesses in the sector face. "Monday's Chancellor's

Budget did not go far enough to alleviate the unsustainable pressures being

exerted on businesses large and small ... it is clear that the burden of

business rates is simply too high and this unsustainable system needs urgent

reform," she added.

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

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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