Shop prices fall in December during run-up to Christmas

Shop prices continued to fall in December as struggling retailers were forced to respond to weak consumer demand and intense competition in the all-important run-up to Christmas.

Discounting ahead of Christmas led to a 0.4% drop in prices compared with December last year, and a 0.5% decrease in November.

Food inflation was relatively modest at 1.4% as pressures from the global market trickled down to the consumer.

Source: British Retail Consortium
Source: British Retail Consortium

However, non-food retailers bore the brunt of weak sales as they competed for discretionary spending by pushing discounts in a last attempt to entice Christmas shoppers, sending prices down by 1.5% on last year.

British Retail Consortium chief executive Helen Dickinson said: “Shop Prices continued to fall in December as receding inflationary pressures, weak consumer demand and intense competition combined to keep price increases at bay.

“2019 has been a particularly challenging year, with historically weak sales growth.”

Ms Dickinson added: “While we expect future upward pressures on shop prices from movements in global food prices, these are likely to be relatively modest. The highest risk to prices remains the outcome of Brexit negotiations.

“With a new year comes a new Government and the opportunity to reduce cost pressures on the retail industry. It is key that the future relationship between the UK and EU secures tariff-free and low-friction trade in order to ensure a fair deal for consumers. Any future deal must maintain choice and availability by keeping costs down.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “The competition for the discretionary spend of shoppers intensified in December and discounts were deeper and began earlier, as retailers had to work even harder to keep customers shopping due to weak consumer demand.

“The continued deflation in non-food may have helped sales on the high street, however many supermarkets faced with weak volume growths reduced prices in the run up to Christmas to give a short-term boost to sales.”

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