INFLATION RATE CONTINUES TO SLOW

The BRC Shop Price Index (SPI) for June showed that overall shop prices were 0.39% higher than at this time last year. Food prices are 1.40% up compared to last year while the price of non-food items showed a decrease of 0.24% compared to this time last year. Overall shop prices in June showed a decrease of 0.31% from May. This was mainly as a result of the price of non-food items decreasing by 0.55% since last month.

Kevin Hawkins, Director General, BRC comments:

"With many retailers making the most of the short burst of fine weather in June and starting their summer sales early, the price of non-food items was lower that this time last year. Food prices increased slightly in June, mainly due to shortages in the supply of certain commodities.

"The annual rate of retail price inflation is continuing to slow and retailers are doing everything they can to stimulate consumer demand - but our industry needs some support. A reduction in interest rates is long overdue and we are hoping for a sensible outcome from tomorrow's MPC meeting."

BRC Comments:

Overall Index

The overall shop price index for June shows a decrease of 0.31% compared to May, falling to 102.17. Compared to June 2004, the overall index has increased by 0.39%.

Despite the small increases seen in recent months, so far this year the overall rate of inflation has remained significantly lower than the last two years.

Food Index

In June, the price of food items showed a slight increase of 0.10% compared to May, to reach 114.79. Although this is an increase, prices have only risen slightly compared to June last year, rising by 1.40%, down from the 1.70% increase seen last month.

The main contributing factor for this decrease was as a result of continuing seasonal demand. However, this has been outweighed by exceptionally high demand for certain vegetables such as Asparagus, have caused supply issues, resulting in an increase in price.

The price of coffee saw an increase in June as a result of the continuing fall in global supplies putting pressure on prices as demand increases.

Non - Food Index

The price of non-food items decreased by 0.55% since May, falling by 0.24% since this time last year.

With the majority of retailers starting their summer sales slightly earlier this year, there was evidence of discounting on clothing and footwear, with reductions of summer ranges .

There were also sales and heavy discounting on DIY & hardware, home furnishings, and electrical goods. However, sales and promotions continued on kitchens, kitchen equipment, and bathrooms and in particular, garden furniture, where the discounting surrounding gardening related items continued.

Shop Price Index & Inflation Rate

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