Co-Op says little volume growth in grocery market

LONDON (Reuters) - The Co-Operative Group, Britain's biggest mutual retailer, said on Wednesday food price inflation was running around 5 percent at its stores and the British grocery market was flat. "There's not much volume growth in the market right now," Chief Executive Peter Marks told Reuters, adding he believed food prices were close to a peak. In a telephone interview, Marks said the Co-Op had reinvested many of the benefits from its founding merger in July 2007 into lower prices, such as its recent "Great Deal Locally" campaign, to remain competitive with budget-focused rivals. The group would do the same with the benefits from its recently-agreed acquisition of Somerfield, he added, although he declined to specify the sums of money involved. Earlier on Wednesday, the Co-Op reported a 36 percent rise in first-half operating profit and like-for-like sales growth at its food stores of 5 percent. Marks said Britain's Office of Fair Trading was close to concluding its investigation into the Somerfield deal, at which point the Co-Op would know how many stores it may have to sell on to obtain regulatory clearance. "In this mature market, most of the big food retail operators are acquiring space ... we're pretty much talking to anyone and everybody, he said. (Reporting by Mark Potter; Editing by David Holmes) ʘ