Britain's broadcasting watchdog criticized the BBC Monday after ageing rock wildman Iggy Pop used the expression "Paki shop" on live television.
Pop made the comment during an interview after playing a set at the Glastonbury Festival in June, telling BBC 2 about how much he enjoyed walking around north London.
"The beauty of being me is that you can wear expensive clobber and you can walk down Camden High Street at a Paki shop..." he said, in rambling comments late at night.
The presenters did not say anything about it at the time, but the BBC issued an apology the following day, saying Pop was probably not aware that the expression had passed out of "polite usage" in the last 30 years.
"Iggy Pop is one of the wildest men in rock music and, as such, he has a built-in content advisory warning," said the BBC, which received two complaints about the remark.
But the Ofcom watchdog said the term breached broadcasting guidelines.
The BBC "failed in its responsibility to ensure that the offence caused was justified by the context, for example by lessening it through issuing an on-air apology as soon as possible after the incident occurred," it said.
"Paki shop" used to be a widely used British term for a small grocery store, generally run by Pakistani or Indian families, which typically open later at night or on weekends than other shops.
It is now seen by many as having offensive or racist overtones.