UK shop-price growth slowed last month as food inflation eased and retailers offered discounts to attract shoppers, the British Retail Consortium said. 

Retail prices rose 2.8 percent from a year earlier after advancing 2.9 percent in June, the BRC and Nielsen Co. said in an e-mailed report in London on Wednesday. On the month, prices fell 0.2 percent after increasing 0.5 percent in June. 

Britons are seeing their finances squeezed at the fastest pace since the 1970s as inflation outpaces wage growth and the government implements budget cuts and increases sales tax to reduce the deficit. The Bank of England will keep its key interest rate at a record low tomorrow, economists forecast, as recent survey data adds to signs the recovery is faltering. 

“We have seen sales volumes slow across both food and non- food retailing in recent weeks,” said Mike Watkins, Nielsen’s senior manager for retailer services. “Retailers have responded with a continuation of price cuts and promotions. Whilst prices will still be higher than last year, the rate of increase may start to slow later in the year.” 

Food-price inflation slowed to an annual 5.2 percent in July from 5.7 percent the previous month, while the rate of non- food price gains was unchanged at 1.3 percent, the BRC said. It cited “good crops” of fruit and vegetables and a decline in meat prices for the easing in food inflation. 

In a separate report on Wednesday, KPMG LLP and the Recruitment and Employment Confederation said an index of hiring of full- time staff rose in July from a 22-month low in June, while starting pay for people placed in permanent jobs climbed from a 20-month low. 

The gauge of permanent job placements reported by employment consultancies rose to 52.4 from 52.2, the groups said. The measure of average salaries awarded to employees finding a permanent position gained to 53.4 from 51.2. Readings above 50 indicate an increase. 

(Source: Bloomberg)