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Economy

Christmas discounts push shop price deflation to 9-month high

Shop prices in December fell at their fastest rate for nine months, having previously been “teetering on the edge of inflation,” according to new figures.

The latest British Retail Consortium (BRC) and Nielsen Shop Price Index showed overall shop prices dropped 0.6% cent in December compared with the same month last year. This compares with November when deflation was at 0.1% – the lowest since 2013.

Helen Dickinson OBE, chief executive of BRC, said: “After several months of shop prices teetering on the edge of inflation, December saw them retreat deeper into deflationary territory. Prices in December fell at the fastest rate since March this year when only last month we saw the shallowest rate of deflation for four years.

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“This is good news for shoppers. Retailers offered lower prices at the beginning of December than last year on many of their non-food ranges, providing welcome options for Christmas shoppers on a stretched budget. These discounts allowed consumers some much needed breathing room during the festive period at a time when the cost of their food shop is on the rise.”

The figures also showed:

  • Non-food prices fell at their fastest rate since January 2017, declining 2.1% year on year compared to 1.1% in November
  • Food inflation gathered steam, with inflation increasing to 1.8% in December, up from 1.5% in November
  • Fresh food inflation picked up, with inflation increasing to 2.0%, a significant increase on November’s 1.3% rate
  • Ambient food inflation continued at similar pace as last month: prices increased by 1.7% year on year in December, slightly down from the 1.8% recorded in November

Mike Watkins, head of Retailer and Business Insight Nielsen, said: “The SPI inflation rate is below other inflationary measures, showing there is little inflationary pressure coming from retailers.

“With consumer confidence wavering and unpredictable levels of demand, many non-food retailers have been keeping prices low to stimulate spending, which will undoubtedly have come at a cost to margins.  

“Whilst food prices have edged up a little due to supply chain increases in fresh and seasonal foods, pricing across supermarkets will remain competitive as we start 2018 with consumers still coping with higher household bills.”

 

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