Inflation tailwind for Australian supermarkets as cost pressures build, Jefferies says

By Reuters News

** Jefferies supermarket inflation index shows prices rise 3.5% YoY in September quarter, easing from 3.7% in June as fresh-food inflation moderates

** The index tracks weekly prices for fixed baskets of products at supermarkets

** Food inflation buoying sales, though political and media scrutiny may cap margin gains, brokerage says

** Expects inflationary pressure to be compounded by global Super El Niño event, while retailer price investment may provide some offset

** Says promotions narrowed but deepened in September quarter, with Coles COL.AX discounting more products and at greater depth than Woolworths WOW.AX

** Australian consumer staples .AXSJ ease 0.5% by midday, with WOW and COL among biggest drags

** .AXSJ up 10.8% YTD, with WOW advancing 30%, COL adding 7%.

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