Retail cannot be blamed for inflationary pressure

Very little inflationary pressure is coming from the retail sector, according to official figures.

The latest data from the British Retail Consortium shows Shop Price Inflation running behind both Consumer Price Inflation and Retail Price Inflation.

The main factors driving inflation are high fuel and transport costs – the result of soaring global commodity prices, not shop prices.

British Retail Consortium economist, Richard Lim, said: “Inflation is now running at 4% and has been above the Bank of England’s target for more than a year. By contrast, the Shop Price Index has stayed at around 2%.

“Our figures show that food inflation is at a 19-month-high. Despite that, overall shop prices are still rising more slowly than the official measure, which includes petrol, utilities and services. Upward pressure on prices is not coming from the high street.

“The VAT rise had little effect on shop prices in January. The impact of the increase was almost entirely lost among the unusually high number of post-Christmas discounts and promotions.”

Overall shop price inflation increased to 2.5% in January from 2.1% in December.

Lucy Shaw, 21.02.2011