Retail price inflation slows as sales begin earlier

Deputy Business Editor

Wednesday 4 July 2012

SHOP price inflation has slowed to its lowest level since November 2009, according to data from the British Retail Consortium.

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Greig Cameron

It was down 0.4% to 1.1% in June as retailers hold back prices due to food commodity and oil prices dropping.

Food price inflation fell from 4.3% to 3.5% month-on-month and is now at a 23-month low.

However, fears over the rising price of wheat and grain due to poor growing conditions may see the figure begin to creep up again in the near future.Deflation in non-food items accelerated from 0.1% to 0.3% in June driven by clothing, footwear and electrical goods as many retailers started their summer sales earlier to mitigate for the poor weather.Stephen Robertson, British Retail Consortium director-general, said: "In a highly competitive market, retailers are rushing to reflect those drops in good deals for customers. At the same time, weak consumer demand continues to drive deep, sparking heavily-targeted discounting, particularly among non-food goods."With real disposable incomes still dropping, let's hope there's more downward pressure to come from past falls in commodity prices working through to inflation."Mike Watkins, senior manager of retailer services at Nielsen, said: "The unpredictable summer weather has dampened recent growth but, with the summer of sports events under way, the fall in inflation should give a boost to shopper spend."

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Retail price inflation slows as sales begin earlier

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