Report: Analyst sees tough quarter for supermarkets

New York City An analyst on Friday forecast a tough upcoming quarter for supermarkets, given food deflation and high competition, but said that fundamentals will improve in the first half of 2010, the Associated Press reported.

Credit Suisse analyst Edward J. Kelly said he expects food price deflation will accelerate to historic highs in coming months.

Overall, however, he remained positive on supermarkets, saying that stocks don’t have much further to fall because investors are already aware of these issues.

Kelly said fundamentals will improve in the first half of 2010 when deflation wanes and there are fewer promotions.