Retailers shield consumers from food price rises
on June 5th, 2008 at 6:24 amThe BRC-Nielsen Shop Price Index (SPI) for the UK reports annual shop price inflation of 1.8% in May. This has increased from 1.2% reported in April.
Overall inflation can be attributed entirely to food, with both ambient and fresh categories increasing by 5.4% and 6.4%, respectively, while non-food remains deflationary. Overall shop prices increased by 0.6% in May compared to last month. Food reported month-on-month inflation of 1.6%, while non-food inflation was flat.
The BRC’s Director General, Stephen Robertson, said: “Intense pressure from rising costs has pushed up the shop price of food but it is clear retailers are continuing to shield customers from the full impact. Shop prices have gone up much less than factory gate prices, up nearly 10 per cent on last year, and oil prices, up more than 80 per cent.” “EU figures show UK customers spend the smallest proportion of their income on food of any EU country because UK retailers continue to offer the most competitive prices they can. Non-food prices fell again in May. They have now been down year-on-year every month since December 2006. Deflation has mainly been driven by electrical, clothing and footwear. Overall shop price rises are again below the Government’s measure of inflation.”
Mike Watkins, Senior Manager, Retailer Services, Nielsen added “Food inflation looks set to continue over the next few months across most categories as cost price increases feed through to shop prices, despite the focus by retailers in recent weeks on money-saving promotions. For high street retailers demand has already weakened and prices have to remain competitive in order to maintain sales. This could mean summer discounts starting sooner rather than later.”
