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Inflation 'held by food prices'

Higher food bills kept the rate of shop price inflation unchanged last month, despite falls for clothing and footwear as retailers stepped up clearance sales to entice shoppers.

Food prices rose by 5% in September, unchanged from August and up by 0.1% over the month, even though the price of some commodities eased back, according to the British Retail Consortium (BRC).

Overall, the rate of shop price inflation was 2.7% in September, unchanged from August, but the mounting pressures on the high street meant non-food prices rose by slightly lower than the previous month, at 1.3%.

Clothing and footwear prices fell by 3.4% year on year, against a 1.7% fall in August, and the fastest fall in annual prices in the sector for nearly two years.

Retailers cleared stocks to make way for new ranges, which contributed to the decrease, the BRC said.

There were offsetting rises in the costs of gardening equipment and DIY, and furniture and furnishings, with household textiles up especially sharply.

Stephen Robertson, BRC director general, said: "The pressures on prices from world commodities, import inflation and January's VAT rise haven't gone away but they haven't worsened either."

He said the food inflation figure was unchanged as higher commodity costs earlier in the year are still feeding into the figures. But the prices of oil and corn have fallen recently, which has a direct influence on the cost of meat, while wheat now costs less than a year ago.

Earlier this month Tesco also launched its Big Price Drop and committed £500 million towards reducing the price of 3,000 lines including milk, bread, fruit and vegetables.

Mr Robertson added: "Fundamental conditions are unlikely to change much this side of Christmas but next month we'll see what effect the supermarket price war, based on straight price cuts rather than other forms of promotion, is having on food inflation."


From Belfast Telegraph