Shop prices in the UK fell by 0.4% in December, compared to a 0.5% drop in November, according to the latest BRC-Nielsen Shop Price Index.
This is below the 12-month average price increase of 0.0% and the six-month average price decrease of 0.4%.
Commenting on the findings, Helen Dickinson, chief executive at the British Retail Consortium, 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.”
Non-Food prices fell by 1.5% in December, compared to a 1.6% decrease in November. This is below the 12- and six-month average price declines of 0.9% and 1.5%.
Food inflation remained steady as pressures from the global market reached the consumer, with a modest increase of 1.4% compared to historic inflation rates. This was below the 12- and six-month average price increases of 1.7% and 1.5%, respectively.
In the fresh food segment, inflation accelerated to 0.8% in December, up from 0.6% in November. This is below the 12- and 6-month average price increases of 1.2% and 0.9%.
Ambient Food inflation eased to 2.4% in December down from 2.6% in November. This is in line with the 12-month average price increases of 2.4% and above the six-month average price increase of 2.3%.
Commenting on weaker sales in the non-food marketplace, Dickinson added, "It is no surprise that December non-food prices fell significantly below the 12-month average for the fifth consecutive month as retailers pushed discounts in one last attempt to entice Christmas shoppers.”
Head of retailer and business insight at Nielsen, Mike Watkins, added, “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 were faced with weak volume growths reduced prices in the run up to Christmas to give a short-term boost to sales."
Dickinson pointed to the forthcoming Brexit negotiations, as well as the establishment of a new government, as an 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," she said.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Elizabeth Schroeder. Click subscribe to sign up to ESM: The European Supermarket Magazine.