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Retailers hold back shop-price inflation in the run-up to Christmas

Underlying inflationary pressures from VAT increase and ambient food and non-food price increases still a concern

GENERAL MERCHANDISE

Retailers hold back shop-price inflation in the run-up to Christmas

Underlying inflationary pressures from VAT increase and ambient food and non-food price increases still a concern

Overall shop price inflation fell to 2.0% in November from 2.2% in October. Food inflation fell to 4.0% in October from 4.4% in September. Non-food inflation fell to 0.9% from 1.1% in September.

Stephen Robertson, British Retail Consortium Director General, said: "A fall in food inflation to four per cent shows the highly competitive grocery market is keeping costs down for customers in the run-up to Christmas. There's been no fundamental change in the upward pressure coming from higher costs for wheat and other commodities but stores are holding back the full force of these rises.

"Thirty eight per cent of fast-moving consumer goods are currently on some form of offer, which is an all-time high. On non-food goods too, discounts and special offers have started well ahead of the traditional January sales, as the dip in overall shop inflation demonstrates.

"With the official measure of inflation now running at more than three per cent for eight consecutive months, a shop inflation figure of two per cent is much lower. It's soaring petrol and energy prices that are hitting households. Retailers don't want to be adding to that burden."

Mike Watkins, Senior Manager, Retailer Services, Nielsen comments: "Whilst it is good news for shoppers that the rate of change in shop prices has slowed this month there is still upward pressure from ambient food and non-food price increases are being held due to seasonal price cutting. We remain concerned about the underlying inflationary pressures and the VAT increase in January and whether this impacts the motivation of the already cautious consumer. In the run up to 31 December we expect retailers to keep promoting heavily and discounting to lower levels in order to drive footfall."

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