A jump in the cost of agricultural commodities drove British shop price inflation to a five-month high in September, but weak consumer demand should contain price pressures in the rest of 2010, a survey showed yesterday.
The British Retail Consortium (BRC) said shop prices in September were 1.9 per cent higher than a year ago, up from an annual rise of 1.7 per cent in August and the highest since April.
The pick-up was driven by a rise in food price inflation to its highest since July 2009 – up by an annual 4.0 per cent – and reflected a recent surge in wheat prices.
Meanwhile, a jump in cotton prices pushed up the price of clothes and lifted non-food prices by 0.7 per cent on the year – the first time the rate has picked up since April.
The price of cotton hit a 15-year high last month as fund managers ramped up their positions in the fibre on the view that demand was picking up and stocks were running low, although prices have subsided more recently.
Meanwhile, a near doubling in global wheat prices is still filtering down to food manufacturers.