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Food price inflation stabilises

Overall shop price inflation increased to 2.7% in February from 2.5% in January. Food inflation fell to 4.5% from 4.6% in January.

CITY & CORPORATE

Food price inflation stabilises

Overall shop price inflation increased to 2.7% in February from 2.5% in January. Food inflation fell to 4.5% from 4.6% in January.

Non-food inflation increased to 1.6% from 1.3% in January.

Stephen Robertson, British Retail Consortium Director General, said:"Food inflation appears to have stabilised for now despite on-going pressure from soaring global commodity costs. The small fall compared with January shows retailers are doing everything they can to keep price rises to a minimum. This is demonstrated by the record proportion of groceries on promotion or discount, currently 39 per cent.

"January's VAT rise is starting to have an impact on non-food prices, pushing up overall inflation compared with the previous month. Even so, non-food inflation would be much higher if the full impact of the VAT rise had been passed on to customers. In fact, strong competition for business is still producing price falls in some areas, such as electricals and clothing.

"Increased fuel costs and rising energy bills are eating into household budgets. The good news is tough retail competition is keeping shop price inflation well below the wider Consumer Price Index."

Mike Watkins, Senior Manager, Retailer Services, Nielsen adds: "With sales momentum slowing at the start of 2011, 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 increase this month. And, whilst some of the increases in VAT have been absorbed by many retailers, the overall result is an increase in shop prices in non-food."

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