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BRC-Nielsen Shop Price Index December 2010 shows retailers battle inflationary pressures

Retailers use discounting to protect consumers

GENERAL MERCHANDISE

BRC-Nielsen Shop Price Index December 2010 shows retailers battle inflationary pressures

Overall shop price inflation increased to 2.1% in December from 2.0% in November. Food inflation was unchanged at 4.0% in December. Non-food inflation increased to 1.1% from 0.9% in November.

Stephen Robertson, British Retail Consortium Director General, said,"Retailers are protecting British consumers from the full-force of global commodity cost increases, with unprecedented levels of discounting taking the sting out of grocery shopping.

"A string of costs are higher than a year ago. Extreme weather and poor harvests have driven coffee up 52 per cent, wheat 45 per cent and soya beans 38 per cent yet the shop price of food is up only four per cent and that figure is no higher than the previous month.

"Overall shop price inflation is well below the wider Consumer Price Index, though price increases in some non-food goods pushed that figure up slightly compared with November. That's consistent with warnings from some retailers that inflationary pressures are working through to prices.

"Next month's figures will show the initial impact of the latest VAT increase. Retailers know that customers are worried about their jobs and personal finances. The competitive retail environment will mean stores go on doing all they can to limit price rises."

Mike Watkins, Senior Manager, Retailer Services, Nielsen comments,"Price discounting for Christmas was deeper and began earlier which has slow down the rate of increase in shop prices in December. As there has been no easing of the general upward pressure on cost prices, retailers have had to work even harder to encourage cash-strapped customers to keep shopping."

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