SHOP PRICES STABLE IN CAPITAL

9 May 2007

Year-on-Year

In April, the LRC-Nielsen Shop Price Index (SPI) showed that prices in the capital were 0.1% higher than a year ago. This is a far smaller year-on-year rise than the 0.8% increase seen in the rest of the UK. The rise came as a result of less discounting and promotional activity compared to April 2006, while food prices, as in the rest of the UK, caused upward pressure on shop price inflation.

Month-on-Month

As in the rest of the UK, the SPI for London showed no change from March. This follows the month-on-month rise of 0.7% in March, the largest rise since the index began in December 2005. The discounting in non-food was outweighed by a continued rise in food price inflation. The index now stands at 98.47.

Kevin Hawkins, Director, LRC comments:

“Shop price inflation in London continues to be well below the rest of the UK. The on-going force of price competition and Easter promotions kept a lid on shop price inflation in April. Consumers’ confidence has fallen and their willingness to spend is affected by recent interest rate rises and increased living costs, so discounting looks set to continue, which is good news for consumers. While another rate increase may well be on the cards this month, there is still a strong case for the MPC to hold off until the full impact of the previous three have worked through.”

Mike Watkins, Senior Manager, Retailer Services, Nielsen comments:

“Whilst price levels were more stable this month, should a rate rise happen we would expect the London consumer to change shopping behaviour quite quickly, particularly on the High Street and this may require retailers to then move prices down again to stimulate demand.”