Inflation in British stores still growing

Julian Harris
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PRICES in British shops rose again in February, despite a slowdown in food price inflation, the British Retail Consortium (BRC) revealed today.

Overall prices grew 0.7 per cent compared to January, when they increased by 0.6 per cent on December. Inflation in February rose to an annualised rate of 2.7 per cent, up from 2.5 per cent the previous month.

“The good news is tough retail competition is keeping shop price inflation well below the wider consumer price index,” said the BRC’s Stephen Robertson. CPI inflation is expected to exceed four per cent in February.

“Even so, non-food inflation would be much higher if the full impact of the VAT rise had been passed on to customers,” Robertson added.

Weak consumer demand may be keeping a lid on food prices.

“Food retailers have had to maintain promotions and price cuts at the high levels we saw in December and this has helped to mitigate some of the effects of the underlying inflation,” said Mike Watkins of Nielsen, which collates the data.

Food price inflation measured 4.5 per cent year-on-year in February, down from 4.6 per cent in January.

At the beginning of the year food prices jumped 1.6 per cent compared to December, but the monthly increase to February was only 0.3 per cent.

“Food inflation appears to have stabilised for now despite on-going pressure from soaring global commodity costs,” the report said.