Prices in shops fall at fastest rate since March

SHOP PRICES fell at their fastest rate since March in a mixed December for consumers, who saw the cost of food continue to edge up.

Overall shop prices were 0.6 per cent cheaper last month than the same time last year, the deepest deflation since March and coming just after November’s shallowest rate of deflation for four years at 0.1 per cent, according to the BRC-Nielsen Shop Price Index.

Non-food prices fell at their fastest rate since January last year, dropping 2.1 per cent year on year compared with November’s 1.1 per cent. However, food inflation gathered steam, increasing to 1.8 per cent in December from 1.5 per cent in November fuelled by climbing global prices earlier in the year, the BRC said.

Inflation on fresh food hit shoppers particularly hard, increasing to two per cent in a significant jump from November’s 1.3 per cent.

British Retail Consortium chief executive Helen Dickinson said: “After several months of shop prices teetering on the edge of inflation, December saw them retreat deeper into deflationary territory.

“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.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “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.”