Bloomberg News

U.K. Shop-Price Inflation Quickens as Discounts Lessen, BRC Says

June 06, 2012

U.K. shop-price inflation quickened in May as retailers struggled to maintain the discounts they used to attract cash-strapped consumers, the British Retail Consortium said.

Retail prices rose 1.5 percent from a year earlier, compared with a 1.3 percent gain in April, the trade group and Nielsen Co. said in a report in London today. Food-price inflation held at 4.3 percent.

The Bank of England left its bond-purchase target unchanged last month as it forecast inflation would remain above its 2 percent for longer than previously expected. Still, a slump in manufacturing this month prompted Deutsche Bank AG to forecast it will restart stimulus tomorrow.

“Some prices are moving upwards as retailers struggle to maintain the margin-sapping discounts which reached unsustainable levels in the face of weak consumer spending,” BRC Director General Stephen Robertson said in the report. “Easing commodity prices helped combat rising property and distribution costs. There’s still a possibility of future supply shocks but the outlook for inflation looks set to remain at modest levels.”

A separate survey today by Lloyds Bank showed U.K. business confidence in the economic outlook plunged in May to its lowest level in five months as concerns about a potential exit of Greece from the euro area escalated. The index of sentiment dropped to minus 21 in May from 26 the previous month.

The bank questioned 301 companies with sales of less than 1 million pounds ($1.24 million) May 8-18.

To contact the reporters on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net; Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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