UK shop prices increased at a 1.1 per cent year-on-year pace in February, following a rise of 0.6 per cent in the month before, according to the British Retail Consortium (BRC).

The rate of food inflation decreased to 3.5% in February from 4.0% in January. Non-food prices fell by 0.4% in February, compared with a 1.4% drop in January.

Helen Dickinson, British Retail Consortium Director General, highlighted the more moderate pace of food price increases which, according to her, shows how past falls in commodities such as wheat and corn are continuing to filter through.

She warned, however, that: "There are still pressures in the pipeline, especially from recent rises in the price of animal feed, but barring any major shocks I would expect food inflation to stay fairly steady in the medium term."

Dickinson also called attention to the fact that discounting, while less extensive than last month, is still prevalent, given retailers' need to compensate for weak consumer confidence.

Lastly, and commenting on the outlook for the Easter shopping period, Mike Watkins, Head of Retailer and Business Insight at Nielsen added that lower food inflation will help consumers in the short-run although, "the outlook for inflation remains uncertain."

AB

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