Bloomberg News

U.K. May Shop Price Inflation Slows on Discounting, BRC Says

June 07, 2011

June 8 (Bloomberg) -- U.K. shop-price inflation slowed in May to its weakest pace this year as retailers offered more discounts to tempt shoppers, the British Retail Consortium said.

Prices charged by retailers rose 2.3 percent from a year ago after advancing 2.5 percent in April, the BRC said in an e- mailed statement in London today. On the month, prices rose 0.1 percent after increasing 0.3 percent in April.

U.K. retail sales fell in May from a year earlier as rising prices and concern about their finances unnerved consumers, the BRC said yesterday, while a separate report today showed employment growth slowed. The Bank of England will keep its benchmark interest rate at a record low of 0.5 percent tomorrow to support the recovery, according to all 55 economists in a Bloomberg News survey.

“Inflation and other rising household bills are still top of the mind for shoppers so retailers are offering more promotions and deeper price cuts,” said Mike Watkins, senior manager of retailer services at Nielsen, which compiles the price gauge with the BRC. “This continues to be an important driver of sales for retailers and a coping strategy for shoppers but should not be seen as the long term answer to any weakening of consumer demand.”

Annual food-price inflation quickened to 4.9 percent in May, the most since June 2009, from 4.7 percent the previous month, while non-food price gains slowed to 0.8 percent from 1.2 percent, the BRC said.

KPMG LLP and the Recruitment and Employment Confederation said an index of hiring fell to a seven-month low in May. Hiring of both permanent and temporary staff eased, while growth in job vacancies increased at the slowest pace in five months.

The gauge of permanent job placements reported by employment consultancies fell to 55.1 from 60.6 in April, the groups said. Readings above 50 indicate an increase in hiring.

--Editors: Fergal O’Brien, Jeffrey Donovan

To contact the reporter on this story: Svenja O’Donnell in London at

To contact the editor responsible for this story: Craig Stirling at

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