U.K. shop-price inflation slowed to almost a two-year low in January as retailers kept prices in check to lure cash-strapped shoppers, the British Retail Consortium said.
Retail prices rose 1.4 percent from a year earlier, the lowest since March 2010, down from a 1.7 percent gain in December, the trade group and Nielsen Co. said in an e-mailed report in London today. Non-food inflation was zero, the least since November 2009. A separate report showed hiring for full-time jobs increased “modestly” in January.
“Retailers are holding down prices for customers despite a range of upward pressures,” Stephen Robertson, BRC director general, said in a statement. “For there to be any significant improvement in retailers’ fortunes in the coming year, it’s essential that people feel better about their personal finances and become more willing to spend.”
The Bank of England will probably add to emergency stimulus this week after Britain’s economy contracted in the fourth quarter and the crisis in the euro area hurt confidence, according to a Bloomberg News survey of economists. Policy makers predict inflation will cool “sharply” this year, easing the squeeze on consumers.
The pound gained against the dollar, rising 0.1 percent to $1.5919 as of 08:05 a.m. in London.
Price growth eased last month as the government’s sales-tax increase in January 2010 dropped out of the annual comparison. The BRC report also showed that food prices rose an annual 3.7 percent in January, the least since July 2010, down from 4.2 percent the previous month.
KPMG LLP and the Recruitment and Employment Confederation said their index of hiring of full-time staff rose to 51.2 in January from 48.5 in December. An index of hiring of temporary workers rose to 49.4 from 49. Readings below 50 indicate contraction.
The Bank of England will probably raise its bond-purchase target by 50 billion pounds ($80 billion) to 325 billion pounds, according to 34 of 50 economists in a survey. Fifteen forecast a 75 billion-pound increase and one predicted no change. It will also keep its key interest rate at a record low of 0.5 percent, according to all 56 economists in a separate poll. The bank will announce the decision at noon tomorrow.