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A better performance in the second half has boosted full-year like-for-like sales 1.5% at AG Barr (BAG) as consumers switched to its new no sugar Irn-Bru.

The launch of Irn-Bru Xtra and Rubicon Spring in the summer helped the soft drinks firm recover from a disappointing first half.

Total revenues in the 52 weeks to 28 January are expected to come in at about £257m, AG Barr said in a pre-close trading update this morning.

The business added that the result was generated despite the UK soft drinks market remaining “highly competitive”, with the latest IRI data for the 48 weeks to 1 January 2017 showing value up 1% and volume up 1.5%.

“We have maintained tight control of our costs and, in the final quarter, successfully implemented a company-wide re-organisation that has both enhanced our organisational capability and reduced our overhead base,” the statement said. “The operating margin for the financial year remains in line with our expectations.”

Looking ahead, AG Barr expected 2017 to be another challenging year for UK-based businesses as a result of the uncertain economic environment.

“However our strong and flexible business model, our differentiated brands and our well-invested asset base ensure we are well placed to continue to deliver long-term value to shareholders,” AG Barr said.

Shares rose 1.5% as the markets opened to 511.5p.

Falling prices, changing consumer tastes and a disappointing summer hit first-half revenues at the Irn-Bru maker, with totals sales down £5m to £125.6m and like-for-like sales down 2.8%.

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Deflation accelerated on the high street in January as stock clearances by retailers drove down prices. Overall shop prices fell 1.7% last month, compared with a 1.4% fall in December, the latest BRC – Nielsen index revealed. Non-food deflation accelerated to 2.3% in January, deeper than the 1.9% decline in the previous month, and food deflation accelerated to 0.8% from the 0.7% decline in December. Fresh Food deflation remained at 1.2% for the third consecutive month and ambient food moved back into deflationary territory after a marginal rise in December, falling 0.2% in January.

Mike Watkins, head of retailer and business insight at Nielsen said: “Consumer demand was perhaps better than expected at the end of last year and retailers are still managing to limit currency related cost increases being passed onto shoppers. This is helping to give some stability to the industry at the start of 2017. However, there is already inflationary pressure elsewhere in the economy and this will start to have an impact on the disposable income of households later in the year.”

BRC chief executive Helen Dickinson added: “For now, consumers continue to benefit from falling shop prices year on year. However, fluctuations in the monthly figures belie an underlying trend of building cost pressures that are gradually feeding through from the fall in sterling combined with higher commodity prices. This will inevitably mean that we start to see a general upward trend in inflation over 2017.

“In fact month-on-month food prices were up, although the impact of this on inflationary pressure was offset by the discounting of excess stock by a number of non-food retailers after a tepid sales performance over the festive period.

“Retailers’ focus will be on protecting their customers from the effects of increasing input costs, but with the cost of doing business rising and margins and profits being squeezed, their efforts will require the support of public policies that help them keep prices low for shoppers. This means capping the annual uplifts in business rates and ensuring no new tariffs remains a core objective of the negotiations on exiting the EU.”

The FTSE 100 opened up 0.7% to 7,149.53 points, with Imperial Brands (IMB) up 0.9% to 3,707.5p, Coca-Cola HBC (CCH) up 0.9% to 1,828p and Unilever (ULVR) up 0.7% to 3,251.5p. Ocado fell back 2% (see below) to 244.3p

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Shares rose 2.3% to 250.1p – although had been as up as 5% – after full-year sales increased 14.8% to £1.27bn.Ppre-tax profits before exceptional items for the year to 27 November 2016 were also up 22%.

Greencore (GNC) was the major riser in the grocery world, with the stock leaping almost 8% to 235p, after a trading update covering the 13 weeks to 30 December 2017 revealed a 17.1% increase in sales to £417m.

Britvic (BVIC) had a similarly impressive day, up 6.2% to 625.5p, on the back of a strong start to the year. The soft drinks group reported a 4.3% jump in Q1 revenues to £351m.

Fallers included Tesco (TSCO) and Booker (BOK), down 1.4% to 195p and 0.2% to 204p respectively as shareholders take a profit from the big rises last week.

The FTSE 100 slipped 0.3% to 7,099.15 points after spending most of the day in the black.

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