UK shop prices fall less sharply as food prices rise - BRC

LONDON, Feb 3 (Reuters) - British shop prices fell slightly less sharply last month than in December, British retailers said on Wednesday, helped by a first rise in food inflation since August.

Nonetheless, prices are likely to remain subdued, the said, the survey's compiler said, a latest sign that the Bank of England is under no pressure to raise interest rates.

Overall prices fell 1.8 percent on an annual basis, after a 2.0 percent drop in December, the British Retail Consortium (BRC) said.

Food prices rose 0.1 percent year-on-year in January but the BRC said it was unclear whether this was a one-off rise.

Non-food prices fell by 3.0 percent after a similar drop in December as retailers slashed prices to attract consumers.

"Sales momentum in January has been slow for some retailers with shoppers seeking out the best prices online and in store, and this competition is helping keep non-food shop prices lower than a year ago," Mike Watkins, head of retailer at Nielsen, which collates and analyses the data on behalf of the BRC said.

"Many seasonal lines have also come off promotion which will have moved food prices upwards a little, but there is still no general upward pressure on prices."

Consumer prices have hovered near zero for months and wage growth is slowing making it hard for the BoE to deliver its first rate rise in nearly a decade. The BoE is expected to keep rates steady at a record low of 0.5 percent on Thursday.

Watkins said overall shop prices deflation, which began nearly three years ago, was expected to persist for the next few months.