Consumers are continuing to enjoy an “incredible run of good fortune” in the UK, figures suggest – with prices on the high street continuing to tumble.
Overall, shop prices saw deflation of 2% in December, according to the BRC-Nielsen Shop Price Index, helping squeezed parents buying gifts in the run-up to Christmas.
This deflationary trend has now been ongoing for two years and eight months – and analysts predict that it will last well into 2016, as oil and other key commodities are unlikely to bounce back from the dramatic fall in prices seen recently.
Food prices in December were 0.3% lower than 12 months previously.
Meanwhile, non-food deflation stood at 3% – and this has been attributed to aggressive price cuts across hardware, gardening, electrical, footwear and clothing products.
Helen Dickinson, chief executive of the British Retail Consortium, said: “This is an incredible run of good fortune for shoppers who’ve been preoccupied with picking up presents for family and friends, as well as themselves, ahead of the holiday season.
“With retailers continuing to invest in price, relatively low commodity prices and intense competition a hallmark of the industry, we can expect falling prices to continue in the medium term.”
However, she said it was too early to say whether the lower prices were having a positive effect on sales for retailers.
Unfortunately for Next, which was one of the first companies to post a trading update yesterday, there was a 0.5% decline in full-price sales over the crucial Christmas period.
It blamed tough online competition and “unusually warm weather” for the slump – and described the figures as “disappointing”.