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Jul 8, 2010
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Shop price inflation eases to 1.5% in June

By
Reuters
Published
Jul 8, 2010

(Reuters) - Shop price inflation eased for a second month running in June, thanks to cheaper seasonal food and retailers offering football World Cup discounts to lure in shoppers, a survey showed on Wednesday.




The British Retail Consortium said shop prices in June were 1.5 percent higher than a year ago, having risen 1.8 percent on the year in May.

It was the second month in a row that shop price inflation had eased and the BRC said the downward trend was likely to continue.

That is likely to provide some reassurance to Bank of England policymakers -- who start their two-day policy meeting today -- that price pressures have peaked and inflation remains on track to fall back to its 2 percent target.

"Low and stable inflation appears likely for the rest of the year. The fluctuations in commodity cost and exchange rates over the last 18 months have now fed through," said BRC Director General Stephen Robertson.

"Barring any major shocks, we're not expecting sharp movements in price," he added, although he said a planned rise in value added tax from January would push up inflation.

Food inflation eased to 1.7 percent in June from 2.2 percent in May, reflecting a fall in the price of fresh fish and vegetables.

Non-food inflation fell to 1.4 percent from 1.6 percent in May as the price of clothing, footwear, electrical goods, books, stationery and home entertainment goods continued to fall compared with a year ago, and furniture inflation eased.

"Retailers have been promoting and price cutting to attract shoppers into store with World Cup activity featuring in many campaigns," said Mike Watkins of market research company Nielsen, which compiles the data.

(Reporting by Fiona Shaikh)

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