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Sancho Panza

Supermarket Price War Sees Till Prices Fall For 16Th Straight Month

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Telegraph 3/9/14

'Consumers have enjoyed a 16th consecutive month of falling high street prices, as an ongoing price war between the nation’s grocers has held down food inflation.

Food prices grew at just 0.3pc in August on the same month a year earlier, according to the British Retail Consortium (BRC)-Nielsen Shop Price Index, the lowest level of inflation since records began, in December 2006.

Combined with continuing reductions in non-food till prices, overall shop prices dropped by 1.6pc in the same period, falling more slowly than July’s 1.9pc drop.

Price warfare between the UK’s big four supermarkets - Asda, Sainsbury’s, Tesco and Morrisons - has become entrenched, in an attempt to combat rivals Aldi and Lidl.

The battle has been to the benefit of savvy shoppers, as the BRC-Nielsen data showed that food inflation averaged just 1.3pc over the 12 months to August, and 0.4pc over the three months running to August.

Retailers engaged in heavy discounting over the summer, especially on vegetables, fish, milk, cheese, and eggs.

Mike Watkins, head of retail and business insight at Nielsen, said that supermarkets took the “opportunity to capitalise on the improved summer weather by keeping prices low, to tempt shoppers to spend a little more on food and drink”.

The prices of the majority of the agricultural commodities that BRC-Nielsen tracked fell over the second quarter of this year.

Those falling input costs, along with subdued oil inflation “will be passed on to consumers” as the UK enjoys a buoyant recovery, said Helen Dickinson, director general of the BRC.

“While the Bank of England’s recent estimates suggest that retailers margins are still below pre-crisis levels, retailers will take heart from an outlook for costs that is broadly encouraging”, said Ms Dickinson.

Among the exceptions, cocoa prices increased on growing global demand for chocolate, driving them to a three-year high.

Recent data from Kantar Worldpanel showed that Tesco’s leading position has been eaten away by its younger foes, as the grocer’s market share fell to 28.8pc in the 12 weeks to August 17, from 30.2pc a year ago.

The overall growth of the grocery market fell to a 10-year low of 0.8pc in the 12 week period, said Edward Garner, of Kantar.

The falls in sticker prices seen in non-food retail sales eased slightly in August according to the BRC-Nielsen data, slowing from 3.3pc to 2.9pc.

Prices fell faster across DIY, gardening and hardware than in the previous month.'

So,we've margin compression for most retailers but the recovery is strong and entrenched and the outlook for grocers is good because costs are under control-presuming they mean labour costs will still be subsidised by the tax payer and there's zero upward wage pressure in the system(a clear sign of recovery in itself).

Buy those Tesco dips.

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Must say, the cheap rent and the getting cheaper food does offset any grief about the rigged property market. Sitting debt free and watching it implode is not too bad really, but I`m sure there will be some bad consequences down the road somewhere of all this Ponzi economics?

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Milk and dairy are down globally, so that most likely helps.

I am surprised crops haven't been burn this year since it's been a good harvest. Does Goldman have a burning dept.?

Must keep inflation up, even is productivity or crops are up!

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