UK Shopping
High Street inflation rises as food costs surge Reuters

The continuous rise of fuel and food prices have pushed the British retail inflation higher in March, with the overall shop price index increasing to 1.5 percent from 1.2 percent in February.

Food inflation rose 5.4 percent in March, up from 4.2 percent in February, the third straight monthly increase, the British Retail Consortium (BRC) and Nielsen Co. said in release Wednesday. The BRC said deflation was reported in non-food prices which declined to 0.9 percent.

"Weak demand for many goods means retailers continue to battle hard for consumer spending by keeping prices down wherever possible. Non-food prices fell at their fastest for 28 months. Electrical goods and clothing and footwear experienced the biggest price falls driven by widespread promotions." said Stephen Robertson, British Retail Consortium Director General.

The cost of oil has shot up 11 percent since the start of the year and that's driven up transport and manufacturing costs, increasing food inflation.

"Retailers are also shifting away from multi-buy reductions on specific items in favour of money-off coupons for an entire shop, giving customers more flexibility and producing savings on food shopping which don't show up in this index," added Stephen.

As a result, overall shop price inflation has edged up slightly but remains well below the official consumer price figure of 3.4 percent.

"Due to the rise in fuel and energy costs, consumers are required to cope with falling disposable incomes. With the inflation rising in the food, the supermarkets are expected to keep a storng focus on promotional activity over next few months," said Mike Watkins, Senior Manager of Retailer Services, Nielsen.