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July rise in food prices is seen as a 'short-term blip'

By John-Paul Ford Rojas

Food prices returned to inflation for the first time this year in July though the wider retail sector saw prices remain under pressure, new figures show.

The BRC-Nielsen Shop Price Index shows food prices rose year-on-year by 0.1% after falling every month for the first half of the year.

A fierce supermarket price war has pushed down the cost of groceries for consumers. Food deflation reached 0.9% in March and remained there for the following two months, according to the index. The decline narrowed to 0.4% in June.

BRC director general Helen Dickinson said July's uptick was a "short-term blip in the longer downward trend" and "not very significant".

But it is likely to be welcomed by the likes of Tesco, Sainsbury's, Morrisons and Asda which have seen sales squeezed in the fierce battle for customers sparked by the advance of discounters Aldi and Lidl.

It came as the wider index showed its 27th consecutive month of deflation, at 1.4%, a further deepening after a 1.3% figure in June.

Non-food inflation was at minus 2.3% in July, compared to 1.9% the month before.

Ms Dickinson said: "Clothing retailers were keen to shift their summer stock with widespread discounts clearly part of their strategy."

Furniture and flooring also saw a sharp acceleration in deflation as retailers "attempted to capitalise on stronger levels of demand".

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